Alexei Karas
Roosevelt Academy; Centre for Russian International Socio-Political and Economic Studies (CERISE)
Koen J. L. Schoors
Ghent University - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University - Department of General Economics
Laurent Weill
University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)
April 10, 2008
BOFIT Discussion Paper No. 3/2008
Abstract:
We study whether bank efficiency is related to bank ownership in Russia. We find that foreign banks are more efficient than domestic private banks and - surprisingly - that domestic private banks are not more efficient than domestic public banks. These results are not driven by the choice of production process, the bank's environment, management's risk preferences, the bank's activity mix or size, or the econometric approach. The evidence in fact suggests that domestic public banks are more efficient than domestic private banks and that the efficiency gap between these two ownership types did not narrow after the introduction of deposit insurance in 2004. This may be due to increased switching costs or to the moral hazard effects of deposit insurance. The policy conclusion is that the efficiency of the Russian banking system may benefit more from increased levels of competition and greater access of foreign banks than from bank privatization.
Number of Pages in PDF File: 48
Keywords: bank efficiency, state ownership, foreign ownership, Russia
JEL Classifications: G21, P30, P34, P52
Working Paper Series
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