Journal of Financial Services Research

, Volume 45, Issue 3, pp 307–340 | Cite as

The Government’s Role in Government-owned Banks



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.


Government banks Political factor Government role Merger Distressed bank Institutional factor 


C23 G21 G28 G34 


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Chung-Hua Shen
    • 1
    • 2
  • Iftekhar Hasan
    • 3
  • Chih-Yung Lin
    • 4
  1. 1.Department of FinanceNational Taiwan UniversityTaipeiTaiwan
  2. 2.Southwest ChiaoTung UniversityChengduChina
  3. 3.Fordham University and Bank of FinlandNew YorkUSA
  4. 4.Department of FinanceNational Taichung University of Science and TechnologyTaiwanRepublic of China

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