Distinguished Lectures

Banks Privatization and Regulation in Egypt

Publication Number: ECES-DLS15-E

August, 2000

Author : Gerard Caprio Jr. and Robert Cull

Type : Distinguished Lectures

Privatizing one of the four public banks in Egypt has been on the government agenda for years. More recently, however, there was an announcement that plans had been temporarily halted for lack of consensus. The reactions to this announcement were mixed. Some see it as a lost opportunity for upgrading the banking system, increasing its efficiency, and enhancing its contribution to economic growth. Others see it as appropriate, citing the failing efforts at banks privatization elsewhere (e.g., Chile in the early 1980s and Mexico more recently). Was this decision a missed opportunity or an appropriate course of action? Caprio and Cull attempt to answer this question. They explore whether the privatization of banks in developing countries has been beneficial to the economy or not. They identify the preconditions for successful privatization of banks more broadly. Based on the answers to both questions, they assess the readiness of the Egyptian economy for bank privatization. Finally, they conclude by offering their views about the most reasonable course of action for Egypt.