Effect of Country Governance on Bank Privatization Performance

41 Pages Posted: 2 May 2017 Last revised: 19 May 2017

See all articles by Po-Hsin Ho

Po-Hsin Ho

National Central University at Taiwan - Department of Finance

Chih-Yung Lin

National Chiao-Tung University

Wei-Che Tsai

Oregon State University; National Sun Yat-sen University - Department of Finance

Date Written: May 1, 2017

Abstract

We empirically investigate the role of country governance in the privatization of 113 government-owned banks from 1996 to 2007 across 39 countries. First, privatized banks tend to outperform non-privatized banks after the privatization, which is called the privatization effect. Second, we find that the privatization effect is much larger in developing countries compared to those in developed countries, suggesting that the privatization effect is systematically related to a country’s level of economic development. Third, we discover that country governance enhances the privatization effect in developing countries, which is consistent with the hypothesis that countries with good-governance can minimize the likelihood of political intervention via residual ownership. Conversely, we also find that country governance reduces the privatization effect in developed countries due to smaller spaces for improvement.

Keywords: Government-owned banks; Privatization; Country governance

JEL Classification: G21; G28

Suggested Citation

Ho, Po-Hsin and Lin, Chih-Yung and Tsai, Wei-Che, Effect of Country Governance on Bank Privatization Performance (May 1, 2017). International Review of Economics & Finance, Vol. 43, 2016. Available at SSRN: https://ssrn.com/abstract=2961144

Po-Hsin Ho

National Central University at Taiwan - Department of Finance ( email )

No. 300, Zhongda Rd.
Zhongli District
Taoyuan City, 32001
Taiwan

Chih-Yung Lin

National Chiao-Tung University ( email )

Taiwan

Wei-Che Tsai (Contact Author)

Oregon State University ( email )

Corvallis, OR 97331
United States

National Sun Yat-sen University - Department of Finance ( email )

No.70, Lianhai Rd., Gushan District,
Kaohsiung City
Taiwan

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
34
Abstract Views
316
PlumX Metrics