The political economy of privatization : an empirical analysis of bank privatization in Argentina

Abstract

The authors study the political economy of bank privatization in Argentina. The results of their study strongly support the hypothesis that political incentives affect the likelihood of privatization. They find that: a) provinces whose governors belonged to the fiscally conservative Partido Justicialista were more likely to privatize; b) fiscal and economic crises increased the likelihood of privatization; and c) poorly performing banks were more likely to be privatized. They tested the hypotheses for a specific industry in a specific country, making it possible to control for enterprise performance and institutional characteristics. It seems reasonable to expect that similar results might hold in other industries and countries.Banks&Banking Reform,Decentralization,Municipal Financial Management,Payment Systems&Infrastructure,Financial Crisis Management&Restructuring,Municipal Financial Management,Financial Crisis Management&Restructuring,National Governance,Housing Finance,Banks&Banking Reform