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

For example: ‘The task of the EIB shall be to contribute, by having recourse to the capital market and utilizing its own resources, to the balanced and steady development of the internal market in the interest of the Union…’ (European Investment Bank (EIB), Art. 2 of the Statute refers to Art. 309 of the Treaty on the Functioning of the European Union). ‘In contributing to economic progress and reconstruction, the purpose of the EBRD shall be to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in the Central and Eastern European countries …’ (European Bank for Reconstruction and Development (EBRD), Art. 1 of the Statue). ‘The purpose of the Nordic Investment Bank is to make loans and issue guarantees in accordance with sound banking principles and taking into account socio-economic considerations, to carry into effect investment projects of interest to the Member countries and other countries which receive such loans and guarantees’ (Nordic Investment Bank (NIB), Art. 1 of the Statute). ‘KfW has the function of performing promotional tasks, in particular financings, pursuant to a state mandate in the following areas: small and medium-sized enterprises, liberal professions and business start-ups, risk capital, housing, environmental protection, infrastructure, technical progress and innovations, internationally agreed promotional programmes, development cooperation …’ (Kreditanstalt für Wiederaufbau (KfW), Art. 2 of the Statute).

Governments of Germany, France, Italy, the United Kingdom, Spain, Belgium, the Netherlands, Sweden, Denmark, Austria, Poland, Finland, Greece, Portugal, Czech Republic, Hungary, Ireland, Romania, Croatia, Slovakia, Slovenia, Bulgaria, Lithuania, Luxembourg, Cyprus, Latvia, Estonia, and Malta.

Governments of Albania, Armenia, Australia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, European Investment Bank, European Union, Finland, FYR Macedonia, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Republic of Korea, Kosovo, Kyrgyz Republic, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Serbia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Tunisia, Turkey, Turkmenistan, Ukraine, the United Kingdom, the United States of America, and Uzbekistan.

Governments of Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine.

Governments of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden.

According to the development view, also referred to as the social view or benign view, government-owned banks contribute to economic development and improve general welfare by providing capital and guarantees necessary for infrastructure and entrepreneurial activities in the presence of market constraints, and by addressing specific social issues, such as unemployment, education, and the lack of housing (Gerschenkron 1962; Atkinson and Stiglitz 1980).

The more sceptical political view and the asymmetric information view support the idea that state-owned banks and enterprises are inefficient in the way they fix market failures because they distort market mechanisms, crowd out private investment, misallocate resources for pursuing the individual goals of politicians, and are more prone to agency cost issues such as conflict of interests or bribery (Kornai 1979; Shleifer and Vishny 1994, 1997; Hart et al. 1997).

https://​www.​bvdinfo.​com/​en-gb/​our-products/​company-information/​international-products/​bankscope

While Orbis Bank Focus is specifically dedicated to banks, Orbis contains information on companies associated with all the possible types of industries and activities.

We use the return on assets (ROA), instead of the return on equity (ROE), as our sample is global and ROA is better equipped for a cross-country analysis of banks with different levels of capitalization and leverage (Rivard and Thomas 1997; Athanasoglou et al. 2008).