DOES OWNERSHIP ALWAYS MATTER - EVIDENCE FROM THE INDIAN BANKING INDUSTRY

Existing empirical evidence on the ownership-performance issue is weig hted towards the property rights hypothesis that private enterprises a re superior to public enterprises. However, very few studies examine a developing country in which the strong link between the market for co rporate control and the efficiency of private enterprises assumed by t he property rights hypothesis may not be satisfied. Our study of the I ndian banking industry confirms our expectation that, in the absence o f well-functioning capital markets, there may not be significant diffe rences in the performance of private and public enterprises. Our analy sis highlights the importance of creating appropriate institutions pri or to pursuing privatization in developing countries. (C) 1998 Academi c Press.