Abstract
Some research has concluded that government ownership of banks negatively affects their soundness. Bretton Wood institutions have used these conclusions to advocate for state-owned banks privatization.
This paper shows that this research was weak in the way it controlled for fundamental determinants of soundness of banks, and lacked rigorous econometric analysis. With data covering 2001-2009 we showed
that if there is any relationship between government ownership of banks and their subsequent soundness, it is positive. These results are robust to various measures of financial development, institutional quality and
econometric approaches.
JUSTIN NSENGIYUMVA. (2016) Does Government Ownership Negatively Affect Soundness of Banks? New Evidence, International Review of Management and Business Research, Volume 5, Issue 3.
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