Description

This paper uses a new dataset to reassess th e relationship between bank ownership and bank performance, providing separate estimations fo r developing and industria l countries. It finds that state-owned banks located in developing c ountries tend to have lower profitability and higher costs than their private counterparts, a nd that the opposite is tr ue for foreign-owned banks. The paper finds no strong correlation be tween ownership and performance for banks located in industrial countries . Next, the paper tests whether the differential in performance between public and private banks is driven by political consid erations by checking whether this differential widens during election years; it finds strong support for this hypothesis.