Government Ownership of Banks, Institutions and Financial Development

Svetlana Andrianova, Panicos Demetriades, Anja Shortland

Research output: Contribution to journalArticlepeer-review

81 Citations (Scopus)

Abstract

Using a suitably modified locational model of banking, we examine the influence of institutions, such as deposit contract enforcement, in explaining the share of government owned banks in the banking system. We present cross-country evidence suggesting that institutional factors are relatively more important determinants of the share of state banks than political or historical ones. We argue that rather than privatizing or subsidizing state banks governments in developing countries should build institutions that foster the development of private banking.
Original languageEnglish
Pages (from-to)218-252
Number of pages35
JournalJOURNAL OF DEVELOPMENT ECONOMICS
Volume85
Issue number1-2
Publication statusPublished - Feb 2008

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