Recent Trends in Bank Privatization
This paper revisits trends in bank privatization and analyzes their economic impact over the past 25 years. Building on a novel data set of privatization events for 70 developed and developing countries, it shows that bank privatization became more...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/347911594666821081/Recent-Trends-in-Bank-Privatization http://hdl.handle.net/10986/34127 |
| Summary: | This paper revisits trends in bank
privatization and analyzes their economic impact over the
past 25 years. Building on a novel data set of privatization
events for 70 developed and developing countries, it shows
that bank privatization became more frequent since the
Global Financial Crisis, especially in emerging markets such
as China and India, but also smaller in that the fraction of
a bank's ownership relinquished during privatization
events declined. The majority of privatizations happened via
public sales in domestic capital markets. The banks that
were chosen to be privatized tended to underperform their
peers and had weaker asset quality pre-privatization, but
the empirical evidence on banks' post-privatization
performance is mixed. The paper finds that privatized banks
turn toward more traditional banking models and increase
credit extension with no apparent negative distributional
implications. However, the analysis does not reveal
significant differences in bank profitability
post-privatization, although differences exist between
developed and developing countries. Notably, banks that have
been recapitalized prior to privatization perform
significantly better afterward privatization. |
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