Government Ownership of Banks

This paper investigates the government ownership of banks.Data is analyzed, which yields four key conclusions. First, government ownership of banks is common throughout the globe. Second, government ownership of banks is particularly common in countries with low per-capita income, undeveloped financial systems, interventionalist and inefficient governments, and poor property rights. Third, the government ownership of banks is correlated with slower financial development. Fourth, government ownership of banks is correlated with low growth in per-capita income and lower productivity growth. These findings support recent political theories of the effects of government ownership on firms.