Abstract
Economic theory traditionally supports the viewpoint that government ownership is inefficient and that privatization invariably leads to efficiency improvements. However, there is often frequent opposition to privatization activity because it is difficult to examine and empirically validate the effects of privatization. This is the first study to examine the impact of the privatization of postal saving banks. In this paper, we use event study and find that impacts of the privatization of a postal savings bank in Japan are evaluated as positive. We also find that the privatization of the postal savings bank threatened other banks in rural areas that had hitherto enjoyed a regional monopoly.
Highlights
Economic theory traditionally supports the viewpoint that government ownership is inefficient and that privatization invariably leads to efficiency improvements
As in [2] and [3], we interpret this result as suggesting that the privatization of the postal savings bank in Japan would lead to efficiency improvements
The privatization of the postal savings bank resolved the inefficiency arising from government ownership and privatization leads to an efficiency improvement
Summary
Economic theory traditionally supports the viewpoint that government ownership is inefficient and that privatization invariably leads to efficiency improvements On this basis, the privatization or reform of postal savings banks has accelerated around the world and [1] introduce several international cases. [2] argue that we can infer investors’ expectations of the efficiency improvement associated with privatization from changes in the stock prices of rival firms following the privatization announcement (see Figure 1) Using this approach, [3] investigate the impact of bank privatization and conclude that the privatization of stateowned banks has led to positive efficiency improvements. Particular consideration of the effects of the privatization of postal savings banks This is the first study to examine the impact of the privatization of postal saving banks. If a privatized firm becomes less efficient, it gives positive impacts (+) for rival firms
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