Bank Ownership and Performance in the Middle East and North Africa Region

This paper explores the trends in bank ownership in the MENA region from 2001 to 2008. The relationship between ownership and bank performance is examined; key characteristics, such as size and balance sheet composotion, are accounted for in measuring this relationship. The paper finds that although state banks are larger in size, their performance is significantly weaker than other banks. This is largely due to factors such as policy mandates and operational inefficiencies. Foreign banks are also examined, and are found to perform similarly to domestic banks despite having higher investment costs and smaller sizes. These findings show that although state-owned banks may play a development function, this function comes at a cost.