Privatization, State Ownership, and Bank Performance in Egypt

SummaryIn this study, we address the financial and operating performance of a sample of 12 Egyptian banks from 1996 to 1999, during which time control was transferred from the state to the private sector. Following privatization, the results indicate that some profitability and liquidity ratios for privatized banks decline significantly, but other performance measures are virtually unchanged. Antithetically, the results indicate that the relative performance changes of privatized banks were better than those of mixed banks with majority state ownership but worse than those of banks with other ownership forms (private, state-owned, and mixed private ownership). However, the study finds a strong evidence to support the theory and previous empirical findings that banks with greater private ownership perform better.