Privatization Industry Studies

William Leon Megginson

in The Financial Economics of Privatization

Published in print February 2005 | ISBN: 9780195150629
Published online October 2005 | e-ISBN: 9780199835768 | DOI:
 Privatization Industry Studies

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This chapter examines why governments are choosing to privatize state-owned banks (SOBs), how they are selling SOBs, and whether these sales have achieved the goals set by the divesting governments. The overall impact of state ownership of banks has been disastrous in almost every country. Reducing state influence on credit allocation decisions is essential for countries seeking to establish a more efficient and market-oriented economy. Privatizing governments should completely divest their ownership in banks whenever and wherever it is politically feasible to do so. Privatization is also associated with performance improvements in divested banks, though the extent of improvement varies by region and stage of national development.

Keywords: privatization; state-owned banks; banking industry; state ownership; financial system

Chapter.  16439 words. 

Subjects: Financial Markets

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