Bank Ownership and Performance

48 Pages Posted: 25 Apr 2011

See all articles by Alejandro Micco

Alejandro Micco

University of Chile

Ugo Panizza

United Nations - Conference on Trade and Development (UNCTAD); Graduate Institute of International and Development Studies (IHEID)

Mónica Yañez

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: November 2004

Abstract

This paper builds a new dataset on bank ownership and bank performance covering approximately 50,000 observations for 119 countries over the 1995-2002 period. The paper then uses the dataset to reassess the relationship between bank ownership and bank performance, providing separated estimations for developing and industrial countries. It is found that, while ownership is strongly correlated with performance in developing countries, that ownership is not correlated with performance in industrial countries. In particular, the paper suggests that state-owned banks operating in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks (which tend to be characterized by higher profitability and lower costs). We also find that, in developing countries, the entry of foreign banks plays a useful role by making domestic banks more efficient in terms of overhead cost and spreads, although we do not find any effect on profitability of domestic banks.

Suggested Citation

Micco, Alejandro and Panizza, Ugo G. and Yañez, Mónica, Bank Ownership and Performance (November 2004). IDB Working Paper No. 429. Available at SSRN: https://ssrn.com/abstract=1818718 or http://dx.doi.org/10.2139/ssrn.1818718

Alejandro Micco (Contact Author)

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

Ugo G. Panizza

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Mónica Yañez

affiliation not provided to SSRN

No Address Available

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