Research Discussion Papers, Bank of Finland
No 15/2013:
The government’s role in government-owned banks
Chung-Hua Shen ()
, Iftekhar Hasan ()
and Chih-Yung Lin ()
Abstract: In this study, we reinvestigate the question of whether
government banks are inferior to private banks. We use cross country data
from 1993 to 2007 to trace the different types of government banks. These
types comprise banks that acquire distressed banks, normal banks, or no
banks at all. Contrary to common belief, the evidence shows that unless
government banks are required to purchase a distressed bank because of
political factors (the government’s role), their performances are at par
with that of private banks. This fact particularly holds true in countries
with poor records on political rights and governance.
Keywords: government banks; political factor; government role; merger; distressed bank; institutional factor; (follow links to similar papers)
JEL-Codes: C23; G21; G28; G34; (follow links to similar papers)
51 pages, August 16, 2013
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