Articles by T T Ram Mohan

This paper evaluates the performance of public sector banks (PSBs) consequent to disinvestment by comparing the returns to PSB stocks with returns to the Sensex. We do so on an unadjusted as well as risk-adjusted basis. We also compute the relative returns of private sector banks with respect to the Sensex and use these to compare public and private sector bank performance. We find that PSB stocks' performance on the average was not significantly different from that of the Sensex or from that of private sector bank stocks.

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Privatisation is very much the flavour of the day. Many enthusiasts of privatisation seem to believe that a shift from public to private ownership will automatically make for improved performance. Yet there is little in economic theory or the empirical evidence on privatisation that lends support to such a simplistic belief. The evidence on the impact of privatisation is by no means unmixed. In particular, in less developed countries, where law enforcement and corporate governance tend to be weak, private ownership does not necessarily make for better performance. It is possible, based on the research on privatisation, to draw some tentative conclusions for privatisation policy in a context such as ours.

Whether the move towards eventual privatisation, including transfer of control to foreign banks, is the right prescription for a banking system that has shown an improving trend in efficiency while remaining stable needs to be vigorously debated.

The resignation of Ravi Kanbur as head of the team preparing the World Bank's World Development Report 2000/01 suggests that, the convulsions in east Asia in 1997 notwithstanding, there is little willingness among the high priests of the Washington Consensus to rethink the application of its tenets to the world at large.