The Future of State-Owned Financial Institutions

Preface

 Preface M   be spreading around the globe, but there remain pockets of heavy state involvement—and state ownership of enterprises in particular—throughout the world. This volume focuses on state ownership of financial institutions, especially banks, and examines a series of issues: —How extensive is such state ownership, and what are the recent trends in this regard? —What have been the announced (and implicit) objectives of state ownership of financial institutions? —How have these institutions performed relative to those objectives? Has the performance varied by country? Most of the authors who address these issues, in one fashion or another, conclude that the optimal course is to privatize most, if not all, state-owned financial institutions. On the whole, their records do not justify the subsidies that governments necessarily have had to provide them, or the distortions in the capital markets that their presence creates. Several of the authors recognize, however, that governments may face political constraints that prevent privatization. Accordingly, certain authors address “second-best” options, including tighter supervision and limits on their activities. This book is the sixth in a series of volumes on finance in emerging markets that have grown out of conferences sponsored by the World Bank, the International Monetary Fund (in some years), and the Brookings Institution. Many individuals 00-1335-5-FM 12/9/04 4:47 PM Page ix contributed to the success of the conference and to the production of this volume, and we thank them for their diligence and hard work. Colleen Mascenik at the World Bank was the conference organizer. Shannon Leahy at Brookings provided additional organizational assistance. Diane Hammond and Elizabeth Forsyth edited the manuscript. Funds for the conference and proceedings volume were generously supplied by the World Bank, the International Monetary Fund, and the Brookings Institution. G C World Bank J L. F International Monetary Fund R E. L Brookings Institution M P World Bank   00-1335-5-FM 12/9/04 4:47 PM Page x THE FUTURE OF STATE-OWNED FINANCIAL INSTITUTIONS 00-1335-5-FM 12/9/04 4:47 PM Page xi 00-1335-5-FM 12/9/04 4:47 PM Page xii ...