12 Effect of Bank Privitization on liquidity of the Iranian Banking System

Privatization means assigning the ownership and management of the state firms to the private sector. Following this, it is expected that the efficiency of firms will increase, and so the firms gain more benefits. In the present paper, the performance of the state, private and privatized banks have been compared through studying the effects of privatization on the performance of banking system in terms of liquidity. This study has been conducted using the data of 11 banks during a 13-year period (2005-2017). Three groups of tests including panel regression tests, parametric and non-parametric tests have been used which all three tests have had the same results. The panel regression model has been used to study the effects of privatization on liquidity of the banking system as a whole. The results of model estimation show that privatization has had a significant and positive impact on banks performance in terms of liquidity. In the next step, parametric and non-parametric tests have been conducted to compare the performance of privatized banks in periods after and before applying the privatization. The results show a significant difference in these two periods. Then, the performances of privatized banks in the periods before and after applying the privatization have been compared to the performances of state and private banks. Findings show that compared with state and private banks, the performance of privatized banks has been improved.