How Did State-Owned Banks Respond to Privatization? Evidence from the Indian Experiment

33 Pages Posted: 17 Aug 2010  

Saibal Ghosh

Government of India - Economic Analysis & Policy

Abstract

The paper examines the response of banks to privatization. Using data on all state-owned banks for the period 1990–2006, the findings indicate that fully state-owned banks are significantly less profitable than partially privatized ones. The improvements in performance by partially privatized banks are, in fact, sustained after privatization. In addition, the analysis indicates that privatization improves profitability, efficiency and improves bank soundness, while lowering bank risk. While the improvement in bank risk is typically spread out over a much longer period, the progress in terms of profitability and economic efficiency typically occurs in the post-privatization period.

Suggested Citation

Ghosh, Saibal, How Did State-Owned Banks Respond to Privatization? Evidence from the Indian Experiment. Annals of Public and Cooperative Economics, Vol. 81, Issue 3, pp. 389-421, September 2010. Available at SSRN: https://ssrn.com/abstract=1660008 or http://dx.doi.org/10.1111/j.1467-8292.2010.00415.x

Saibal Ghosh (Contact Author)

Government of India - Economic Analysis & Policy ( email )

Mumbai, Maharashtra 400001
India
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