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Bank privatization, finance, and growth

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Abstract
This paper examines whether privatizing state-owned banks improves finance and economic growth. To do so, we exploit regional banking variations in Russia induced by the idiosyncratic creation of "specialized banks" in the last years of the Soviet Union (1988-91) that were subsequently privatized. Starting in 1999 private banks including surviving spetsbanks emerged as an important source of external finance for private firms and households. We document that the regional concentration of spetsbanks in the early years of the Russian federation is orthogonal to economic fundamentals that are related to growth after the emergence of bank finance. Results indicate that while privatized banking increased lending significantly, it did not increase economic growth. However, privatization did increase growth when banks retained fewer political connections and when regional property rights were better protected, highlighting the importance of both factors.
Keywords
Bank privatization, Finance, Growth, Political connections, Property rights, Spetsbanks (specialized banks), GOVERNMENT OWNERSHIP, RUSSIA, VARIABLES, QUALITY

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MLA
Berkowitz, Daniel, et al. “Bank Privatization, Finance, and Growth.” JOURNAL OF DEVELOPMENT ECONOMICS, vol. 110, 2014, pp. 93–106, doi:10.1016/j.jdeveco.2014.05.005.
APA
Berkowitz, D., Hoekstra, M., & Schoors, K. (2014). Bank privatization, finance, and growth. JOURNAL OF DEVELOPMENT ECONOMICS, 110, 93–106. https://doi.org/10.1016/j.jdeveco.2014.05.005
Chicago author-date
Berkowitz, Daniel, Mark Hoekstra, and Koen Schoors. 2014. “Bank Privatization, Finance, and Growth.” JOURNAL OF DEVELOPMENT ECONOMICS 110: 93–106. https://doi.org/10.1016/j.jdeveco.2014.05.005.
Chicago author-date (all authors)
Berkowitz, Daniel, Mark Hoekstra, and Koen Schoors. 2014. “Bank Privatization, Finance, and Growth.” JOURNAL OF DEVELOPMENT ECONOMICS 110: 93–106. doi:10.1016/j.jdeveco.2014.05.005.
Vancouver
1.
Berkowitz D, Hoekstra M, Schoors K. Bank privatization, finance, and growth. JOURNAL OF DEVELOPMENT ECONOMICS. 2014;110:93–106.
IEEE
[1]
D. Berkowitz, M. Hoekstra, and K. Schoors, “Bank privatization, finance, and growth,” JOURNAL OF DEVELOPMENT ECONOMICS, vol. 110, pp. 93–106, 2014.
@article{8513065,
  abstract     = {{This paper examines whether privatizing state-owned banks improves finance and economic growth. To do so, we exploit regional banking variations in Russia induced by the idiosyncratic creation of "specialized banks" in the last years of the Soviet Union (1988-91) that were subsequently privatized. Starting in 1999 private banks including surviving spetsbanks emerged as an important source of external finance for private firms and households. We document that the regional concentration of spetsbanks in the early years of the Russian federation is orthogonal to economic fundamentals that are related to growth after the emergence of bank finance. Results indicate that while privatized banking increased lending significantly, it did not increase economic growth. However, privatization did increase growth when banks retained fewer political connections and when regional property rights were better protected, highlighting the importance of both factors.}},
  author       = {{Berkowitz, Daniel and Hoekstra, Mark and Schoors, Koen}},
  issn         = {{0304-3878}},
  journal      = {{JOURNAL OF DEVELOPMENT ECONOMICS}},
  keywords     = {{Bank privatization,Finance,Growth,Political connections,Property rights,Spetsbanks (specialized banks),GOVERNMENT OWNERSHIP,RUSSIA,VARIABLES,QUALITY}},
  language     = {{eng}},
  pages        = {{93--106}},
  title        = {{Bank privatization, finance, and growth}},
  url          = {{http://dx.doi.org/10.1016/j.jdeveco.2014.05.005}},
  volume       = {{110}},
  year         = {{2014}},
}

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