SOEs have little chance of becoming competitive if they continue to be drip-fed with loans from state-owned banks that they have scant chance of repaying.
The evidence confirms that countries with the highest proportion of state-owned banks have the highest bank operating costs and the largest proportion of non-performing loans.
His hasty mass-privatisation programme, which made ordinary Czechs the formal owners of most enterprises but gave control to state-owned banks with no interest in improving them, created a crisis that culminated in a humiliating devaluation of the currency in May last year.
Kamath targeted India's rising middle class, who were fed up with the poor service of stodgy state-owned banks and couldn't afford the high charges of foreign banks.
The ratio of non-performing loans at north-eastern bank branches is the highest in the country, which is itself so overwhelmed with bad debts that the big state-owned banks need regular injections of capital in order to avoid insolvency.
In keeping with this trend, some large, state-owned banks and industrial firms have been privatized.
While their overall overseas footprint is still small compared with that of big international oil companies, these companies are expanding with access to cheap credit through China's state-owned banks.
This preferred borrowing venue provides major Chinese state-owned enterprises and banks intimately connected with the PLA and Beijing's security services with access to large sums of undisciplined, unconditioned and inexpensive cash.
Removing subsidies from the huge number of state-owned enterprises and allowing foreigners to compete with Chinese banks are touchy issues with far-reaching domestic consequences.
The IMF pointed to reforming pensions, health care, and state-owned enterprises, improving tax compliance and budget practices, dealing with potential problem banks, improving labor flexibility, and streamlining business regulation.
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In the 1990s a privatising government got around the scarcity of capital and know-how by coaxing state-owned pension funds to co-operate with private companies, and pushed public banks into giving them subsidised loans.
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