Does monitoring by the media improve the performance of government banks?

• We test the correlations between media monitoring and Government-owned banks (GOBs).
• GOBs with strong media monitoring perform as well as privately owned banks.
• GOBs with weak media monitoring apparently underperform privately owned banks.
• Strong media monitoring efficiently alleviates lending corruption in GOBs.
• We suggest that the government should minimize its influence on the media sector.

By examining cross-country data for the period from 2000 to 2010, this study investigates whether monitoring by the media affects the performance of government-owned banks (GOBs). The results indicate that GOBs under strong monitoring do not underperform privately owned banks (POBs), whereas those under weak monitoring do underperform POBs. Further, we find that the strength of the media's monitoring has an important effect on corruption behavior and banks’ performance. This result provides an important policy implication that the government should minimize its ownership, and therefore its influence, in the media sector if it intends to improve the performance of its GOBs.