Bank Ownership and Firm-Level Performance: An Empirical Assessment of State-Owned Development Banks

Abstract

The goal of this chapter is to investigate state-owned development banks and to analyse their performance vis-à-vis to other state-owned and private-owned banks. We use firm-level evidences from Europe to analyse the performance of state-owned development banks and the difference compared to state-owned commercial banks and private banks. Analysing the performance of development banks is a relevant issue. First: assessing development banks’ performance is important to determine their financial sustainability. Second: extant empirical literature on bank ownership and performance has always considered state-owned banks as belonging to the same type, whereas they do not. Our results point to clear differences between development and commercial state-owned banks, with the former performing better than the latter in terms of efficiency. They recognize that state-owned banks are not a monolith and that development banks have specific features and operate in a way not completely examined in the extant literature.