Public Ownership of Banks and Economic Growth - The Role of Heterogeneity

This paper claims that the relationship between government-owned banks and economic growth is dependent on the state of the country's financial development and strength of political institutions. Government-owned banks have an increasingly positive impact on economic growth as a country's financial development and political instutions are strengthened. In very developed countries, the association between government-owned banks and economic growths may even be positive. This disproves the general claim that government-owned banks are correlated with negative GDP growth.