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HOW DID STATE‐OWNED BANKS RESPOND TO PRIVATIZATION? EVIDENCE FROM THE INDIAN EXPERIMENT
Author(s) -
Ghosh Saibal
Publication year - 2010
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/j.1467-8292.2010.00415.x
Subject(s) - profitability index , state owned , business , financial system , soundness , monetary economics , finance , economics , market economy , linguistics , philosophy
** : The paper examines the response of banks to privatization. Using data on all state‐owned banks for the period 1990–2006, the findings indicate that fully state‐owned banks are significantly less profitable than partially privatized ones. The improvements in performance by partially privatized banks are, in fact, sustained after privatization. In addition, the analysis indicates that privatization improves profitability, efficiency and improves bank soundness, while lowering bank risk. While the improvement in bank risk is typically spread out over a much longer period, the progress in terms of profitability and economic efficiency typically occurs in the post‐privatization period.