Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Previous empirical analyses have found that bank privatizations are more successful when the government fully relinquishes control, when the bank is privatized to a strategic investor, and when foreign-owned banks are allowed to participate in the bidding. The privatization of Uganda Commercial Bank (UCB) to the South African bank Stanbic met all these criteria, suggesting that it is a likely candidate for success. But other features suggest reasons for caution: UCB dominated the Ugandan banking sector prior to privatization and the institutional environment in Uganda was less favorable than in many of the middle-income countries looked at in earlier empirical studies. Despite these concerns, the privatization appears to have been relatively successful. The portfolio of the privatized bank, which was cleaned prior to sale, remains relatively strong and profitability and credit growth are now on par with other Ugandan banks. Though market segmentation remains a concern since Stanbic faces little or no direct competition in many remote areas, some early results suggest that access to credit has improved for some hard-to-serve groups.

Access to Finance --- Bank Privatization --- Banking Sector --- Bankruptcy and Resolution of Financial Distress --- Banks --- Banks and Banking Reform --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial Crises --- Financial Services --- Financial Systems --- Income Statements --- Private Banks --- Private Sector Development --- Productivity --- Profitability

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper briefly reviews the main theories of state versus private ownership and empirical evidence on the impact of privatization in developing countries (including transition economies). The paper draws some lessons for policy and offers some suggestions on how to assess privatization, at least in countries where there is still scope for it. The paper suggests that although understanding of the efficiency gains of privatization has increased significantly in recent years, there is an important area about which little is known: the distributional effects of privatization. Whether arguing from the standpoint of welfare economics or political economy, distributional effects are critical to the outcome, or the perceived outcome, of privatization. Thus, there is a need to fully evaluate the ex ante and ex post impacts of privatization, the most effective types of regulation and ownership regimes, and the way in which losers, when there are any, can be compensated. This is a need that must be met by academics and development agencies, including the World Bank and regional development banks.

Bank Privatization --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Budget constraints --- Capitalization --- Economics --- Economies in transition --- Emerging Markets --- Employment --- Externalities --- Finance and Financial Sector Development --- Financial performance --- Fixed costs --- Infrastructure Economics and Finance --- Infrastructure Regulation --- Investment spending --- Laws --- Local governments --- Municipalities --- Operating efficiency --- Private Sector Development --- Privatization --- Productivity --- Profitability --- Public enterprises --- Regional development banks --- Transition economies