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http://ssrn.com/abstract=880596
 
 

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Economic and Legal Considerations of Optimal Privatization: Case Studies of Mortgage Firms (DePfa Group and Fannie Mae)


Hans-Joachim Beyer


affiliation not provided to SSRN

Claudia Dziobek


International Monetary Fund (IMF)

John Garrett


University of Tennessee, Chattanooga

May 1999

IMF Working Paper No. 99/69

Abstract:     
Successful privatization must be accompanied by the complete removal of privileges and any public policy mission. Bank behavior changes rapidly as profit maximation replaces the bureaucratic objective function. Once privileges are granted, they are difficult to remove. Therefore, privatization is a one-time (nonreversible) operation. The German mortgage bank, DePfa, went through a carefully planned and lengthy privatization process that was successful. Fannie Mae, the U.S. mortgage firm, became a privately owned institution endowed with special privileges, which led to a quasi-monopoly position. This resulted in suboptimal financial sector performance. Fannie Mae`s special privileges have proven resistant to reform efforts.

Number of Pages in PDF File: 27

Keywords: Privatization, financial regulation, state banks, Fannie Mae, DePfa

JEL Classification: G2, G38, L51

working papers series


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Date posted: February 13, 2006  

Suggested Citation

Beyer, Hans-Joachim and Dziobek, Claudia and Garrett, John, Economic and Legal Considerations of Optimal Privatization: Case Studies of Mortgage Firms (DePfa Group and Fannie Mae) (May 1999). IMF Working Paper, Vol. , pp. 1-27, 1999. Available at SSRN: http://ssrn.com/abstract=880596

Contact Information

Hans-Joachim Beyer
affiliation not provided to SSRN ( email )
No Address Available
Claudia Helene Dziobek (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
John Garrett
University of Tennessee, Chattanooga ( email )
615 McCallie Avenue
Chattanooga, TN 37403-2598
United States
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