State-Owned Banks, Stability, Privatization, and Growth: Practical Policy Decisions in a World without Empirical Proof

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.This paper provides an overview of the possible linkages between state-owned banks, privatization, and banking sector crises.Data on privatizations in over 65 countries is used together with data from the banking crisis literature to consider the relationship between state-owned banks and financial sector stability.The paper draws on the existing literature to provide guidance to policymakers regarding bank privatization.