Three essays in governance and banking

This dissertation consists of three separate essays. In the first essay, privatization is found to improve bank performance by both better monitoring of existing firms, and improved selection of new bank clients. Data on firms borrowing from government-owned banks, and firms borrowing from a privatized bank suggest that privatization led to an improvement of 1 to 2 percent in the earnings-per-asset of firms financed by the privatized bank. Privatization influenced firms with weak outside options the most. Moreover, bank-debt became more responsive to expected profitability of firms after privatization. Finally, privatization significantly improved the ability of the bank to attract and select more profitable firms, with the newly selected firms having on average, 4 percent higher earnings-per-asset compared to other firms in their cohort. The second essay presents new empirical evidence on differences between domestic and foreign owned private banks in Africa. Domestic banks hold significantly more liquid assets, and are substantially less profitable than foreign banks. However, all of the difference in profitability can be explained by the 2.6% higher interest rate on deposits for domestic banks. Furthermore, domestic banks appear to take on riskier loans, but their return on loans is higher by 2.7%. Foreign banks on the other hand earn significantly more income through bank fees. Finally, domestic banks grow a lot faster than foreign banks with overall economic expansion in the country. A 1% growth in GDP expands domestic bank credit by 1.76% compared to 0.86% for foreign credit.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2001

Author dc:creator

• Mian, Atif Rehman, 1975-

Advisor dc:contributor.advisor

• Abhijit Banerjee and Sendhil Mullainathan.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/33270

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/33270