State-Owned Banks and Fiscal Discipline

By Jesus R Gonzalez-Garcia, Francesco Grigoli

October 3, 2013

Preview Citation

Format: Chicago

Jesus R Gonzalez-Garcia, and Francesco Grigoli. State-Owned Banks and Fiscal Discipline, (USA: International Monetary Fund, 2013) accessed December 3, 2024

Disclaimer: 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

Summary

State-owned banks may help to soften the financing constraints of public sector entities and consequently become a factor that hampers fiscal discipline. Using a panel dataset, we find that a larger presence of state-owned banks in the banking system is associated with more credit to the public sector, larger fiscal deficits, higher public debt ratios, and the crowding out of credit to the private sector. These results suggest that the lending practices of state-owned banks should be carefully assessed in any strategy to pursue fiscal discipline.

Subject: Commercial banks, Credit, Government debt management, Public sector, State-owned banks

Keywords: Bank, Government, Government ownership, Ownership of the banking system, Result, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/206
Stock No:

WPIEA2013206
ISBN:

9781484392805
ISSN:

1018-5941

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