Recent evidence indicates that greater state ownership of banks tends to be associated with lower bank efficiency, less saving and borrowing, lower productivity, and slower growth. At the same time, hasty privatization of banks in unsound regulatory and supervisory environments can result in systemic crisis. The World Bank, therefore, is often called upon to give advice on how to design successful bank privatizations to ensure strong post-privatization performance and improve sector stability.

This project draws on cross-country empirical analyses and detailed country case studies of Argentina, Brazil, the Czech Republic, Egypt, Hungary, Mexico, Nigeria, and Poland to determine when it is most fruitful to pursue bank privatization, how alternative transaction designs affect outcomes, and how to avoid common obstacles. These studies pay particular attention to the political environment surrounding past efforts in this area since political and economic constraints appear to dictate the timing and design of bank privatizations, and timing and design, in turn, affect post-privatization performance. Current outputs are listed below.

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