The Impact Of Factors In The Privatization Of Foreign Banks, Methods, And Performance Studies

This paper examines how political, institutional, and economic factors are related to a country's decision to privatize state-owned banks, methods of privatization, and the performance comparison before and after privatization. The author partitions the sample into OECD and non-OECD countries to see if there are systematic differences based on level of economic development.When contemplating the privatization of a SOB, a government may consider economic and political factors. Different factors have different affection for both OECD and non-OECD countries.Governments usually choose one of three techniques to privatize: Asset sales, share-issue privatizations, or voucher privatizations. SIPs are the largest and most economically significant of all privatizations, and account for the preponderance of the value of assets privatized outside communist and formerly communist countries.In the analysis of pre and post-privatization financial and operating performance in privatized banks, the author tests for differences in bank profitability, efficiency, revenue (sales) growth, and capital adequacy (leverage). Meanwhile, substantial government ownership of banks remains even after privatization, which suggests that continued significant government ownership of banks raises serious problems for establishing market-oriented governance and decision-making systems in the banks.