The Government's Role in Government-owned Banks

Chung Hua Shen, Iftekhar Hasan, Chih-Yung Lin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations


In this study, we reinvestigate the question of whether government banks are inferior to private banks. We use cross country data from 1993 to 2007 to trace the different types of government banks. These types comprise banks that acquire distressed banks, normal banks, or no banks at all. Contrary to common belief, the evidence shows that unless government banks are required to purchase a distressed bank because of political factors (the government's role), their performances are at par with that of private banks. This fact particularly holds true in countries with poor records on political rights and governance.

Original languageEnglish
Pages (from-to)307-340
Number of pages34
JournalJournal of Financial Services Research
Issue number3
StatePublished - 1 Jan 2014


  • Distressed bank
  • Government banks
  • Government role
  • Institutional factor
  • Merger
  • Political factor

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