Government Ownership of Banks, Institutions, and Financial Development

52 Pages Posted: 2 Nov 2006

See all articles by Svetlana Andrianova

Svetlana Andrianova

University of Leicester - Department of Economics

Panicos Demetriades

University of Leicester - Department of Economics

Anja Shortland

University of Leicester - Department of Economics

Abstract

Using a suitably modified locational model of banking, we examine the influence of institutions, such as deposit contract enforcement, in explaining the share of government owned banks in the banking system. We present cross-country evidence suggesting that institutional factors are relatively more important determinants of the share of state banks than political or historical ones. We argue that rather than privatizing or subsidizing state banks governments in developing countries should build institutions that foster the development of private banking.

Keywords: regulation, opportunistic banks, institutional quality

JEL Classification: D82, G21, G28, K42

Suggested Citation

Andrianova, Svetlana and Demetriades, Panicos O. and Shortland, Anja, Government Ownership of Banks, Institutions, and Financial Development. Journal of Development Economics, August 2006, Available at SSRN: https://ssrn.com/abstract=941185

Svetlana Andrianova (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Panicos O. Demetriades

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom
+ 44 116 252 2835 (Phone)
+ 44 116 252 2908 (Fax)

HOME PAGE: http://www.le.ac.uk/economics/staff/pd28.html

Anja Shortland

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

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