Public Banking Research and Information

Reference material on Public Banking

As the following research reports testify, public banking is not a new untested phenomenon, rather public banking is a proven concept that has helped the State of North Dakota tremendously and is alive and well in many parts of the world. One of the roles of PBI is to act as a resource for those who are considering public banking as way to localize credit and revitalize local economies. We will endeavor to update and expand on these research sources as material comes available and would welcome your input and suggestions if you come upon material you consider relevant. Please e-mail frank at with any comments or suggestions.

“Oregon State Analysis of Public Banking Potential”

Center for State Innovation, Revised Oregon State Bank Analysis, December 2010 – 30 pages

This analysis takes a look at the effect a state bank might have on a state’s banking industry by helping to provide liquidity and stability, while using lending rates as a rough proxy for this result. It also compares lending rates in North Dakota’s small and medium sized banks with the equivalent in comparable states. It then attempts to provide a rough measurement of the effects of this increase in lending rates on state job creation/retention.
click to download

“Building State Development Banks”

Jason Judd, Sam Munger, Center for State Innovation – September 2010 – 5 pages
This paper looks at the impact that the Bank of North Dakota has had on that state and gives an overview of the potential benefits for the creation of state development banks in other states.
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“Banking on America: How Main Street Partnership Banks can Improve Local Economies”

Jason Judd, Heather McGhee, Demos 2010
This very up-beat report on the potential of public banking was sponsored by the non-partisan public policy research and advocacy organization, Demos. Demos is headquartered in New York City. Demos has concluded that Partnership Banks, which is another term for public banks, can raise revenue for states without raising taxes and increate loans to small business precisely when the Wall Street Banks are unwilling to do so.
How Main Street Partnership Banks can Improve Local Economies.pdf
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“Direct from Main Street: Oregon Small Business Views on Credit and Lending”

Main Street Alliance of Oregon and Alliance for s Just Society, January 2011 - 16 pages
This paper looks at public banking from the perspective of the small local business, the impact of local businesses on the economy and the importance to these small businesses of credit availability and how a public bank in the state of Oregon could positively affect the success of local business.
Oregon Small Business Views on Credit and Lending.pdf
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"Overview of the Success of the Bank of North Dakota"

May 2011 – 6 pages
This paper provides a short and thorough overview of the history of the Bank of North Dakota (BND) and shows its impact not only on the availability of banking services in the state relative to other states and to the U.S. overall but also outlines how important BND has been to the overall vitality of the state’s economy and the ability of the state government to fulfill its obligations to residents while also keeping its costs down.
Overview of the Success of the Bank of North Dakota - May 2011.pdf
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“Observations on BRIC Government Banks and Financial Statecraft”

Kurt von Mettenheim, University of Southern California, April 2012 – 57 pages
This paper reports evidence that government banks in the BRIC countries having remained in the public domain and having resisted privatization have countered the effects of economic crisis that has swept many developed countries and helped to shape domestic growth. It also outlines the core principles for Alternative Banking and social inclusion.
Government Banking and BRICs in the Recent Financial Crisis.pdf
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“Public Financial Institutions in Europe”

Schmit, Gheeeraet, et al, European Association of Public Banks, March 2011 – 122 pages
This research aims at improving the understanding of the variety and the roles of publicly influenced financial institutions in the 27 EU Member States, plus Croatia, Macedonia, Norway, Switzerland and Turkey. Up to now most previous studies on public banks rely on existing global databases or local data. With this study a structured, definition-based database of public banks and special credit institutions in Europe now exists. This research shows the extensive range of roles fulfilled by the public financial sector and the need of a number of business models, each of which is geared towards effectively fulfilling one or several specific public-interest mission(s). The reader will get an understanding of who the public financial institutions are, what they do, why they exist and how they operate in Europe.
This report makes 4 key contributions to our understanding of public banking in Europe:
1.It provides a structured, definition-based, homogenous database of public banks an funding agencies in Europe
2.It analysis’s these public banking institutions in terms of four parameters: objectives, geographic scope, stakeholders and products and services
3.By linking the public banking missions to a rigorous framework of analysis the report provides a more precise rationale for this type of financial institution.
4.It provides a detailed analysis and overview of the various business models to deepen an understanding of the hybrid forms and variants that exist in the market
European Association of Public Banks Annual Report 2010-2011.pdf
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“Public Banks in Latin America”

Alejandro Micco, Ugo, Panizza – a paper prepared for the conference “Public Banks In Latin America: Myth and Reality” – Inter-American Development Bank, February 2005 – 57 pages
The evidence presented in this paper concludes that public banks in Latin American countries are less procyclical than their private counterparts and that the argument for private banks, namely that they are more efficient than public banks, has not proven to be the case during the period covered in this study. In addition, this report shows that private banks do not cover segments of the markets that require positive social returns but also result in negative profits.
Public Banks in Latin America - IADB report 2005.pdf
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“Financial Development, Government Ownership of Banks and Firm Innovation”

Sheng Xiao, Shan Zhao, Journal of International Money and Finance March 2012 - 27 pages
Using a newly available Word Bank survey of over 28,000 firms from 46 countries, this report examines how government ownership of banks influences innovation. Its conclusion is that countries with lower government ownership of banks, actually have better records supporting firm innovation
Government Ownership of Banks_1.pdf
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“Government Ownership of Banks”

Rafael La Porta, et al, the Journal of Finance, Vol 57, February 2002 The American Finance Association
This report concludes, based on evidence examined, that higher government ownership of banks in 1970 is associated with slower subsequent financial development and lower growth of per capita income and productivity.
Government Ownership of Banks.pdf
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“Alternative Banking: Competitive Advantage and Social Inclusion”

Kurt von Mettenheim, Olivier Butzbach, paper presented at the Society for the Advancement of Social Economics, Madrid, June, 2011 – 55 pages
This paper presents empirical evidence that non-profit financial institutions, i.e. savings banks, cooperative banks, development banks and public banks, what this report calls alternative banks, actually outperform their private competitors. This paper also discusses and analyzes the sources of alternative banks competitive advantage and also reviews the specific features of the alternative banking business models. The ultimate goal of this paper is to contribute to laying the ground for a theory of alternative banking.
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“Are Public Banks Pro-competitive? Evidence from Concentrated Local markets in Brazil”

Coelho, de Mellot and Rezende, Central Bank of Brazil and Departamento de Economia, PUC-Rio - 2002 - 29 pages
This paper attempts to measure the competitive effect of entry of public banks into the local banking markets in Brazil.
pubS-875 Are Public Banks pro-Competitive.pdf
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“A Country Banking Strategy for Paraguay 2004-2008”

Developed by the Inter-American Development Bank 2009
This report is concerned with the overall reformation of the financial sector in Paraguay with a focus on the reform of the public banking system while evaluating the consolidation and restructuring of the public banking sector. The public banking system is the only major player in rural areas of the country.
The IDB - Bank's Country Strategy with Paraguay 2004-2008.pdf
click to download

“Annual Report 2010-2011 of the European Association of Public Banks”

European Association of Public Banks and Funding Agencies, AISBL 2011 – 106 pages
The European Association of Public Banks (EAPB) was founded on 4 May 2000. Members of the EAPB are financial institutions, funding agencies, public banks, associations of public banks and banks with similar interests and have to be domiciled in a Member State of the European Union (EU), in Switzerland, in a signatory state of the European Economic Area (EEA-Treaty) or in a state whose application for Membership of the European Union has been officially accepted. The EAPB has members from various European countries and represents about 100 financial institutions. As a whole, they have a European market share of approximately 15%, a balance sheet total of about € 3.500 billion and they represent about 190.000 employees.
European Association of Public Banks Annual Report 2010-2011_1.pdf
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"Financial Roads to Social Economies: Public Banking, Monetary Authority and Social Inclusion”

Kurt von Mettenheim, Maria Freire de Lima, Society for the Advancement of Social Economics 23rd Annual Conference, Madrid, June 2011 – 46 pages
This paper reviews recent developments in public bank design and concludes that public banks radically increase the pace of financial and social inclusion. Public banking provides an alternative model to the dominant approach in microfinance based on competitive financial markets and private banking.
Financial Roads to Social Economies Public Banking, Monetary Authority and Social Inclusion.pdf
click to download

"Public Financial Institutions in Europe”

Public Financial Institutions in Europe.pdf
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PowerPoint Presentations

Banco Estado is Counter-Cyclical_1.ppt
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“Banco Estado, Commercial Management with Social Impact”, Fernando Ochoa Castillo, Quito, Ecuador, march 2012

This document shows an overview of how the BancoEstado has provided financial inclusion and acted as a counter-cyclical force in turbulent economic times. Other benefits of public banking that are covered in this document are: public banking support for public polices and state modernization, ability to promote business development and entrepreneurship, mobilization of family savings to the public good and promoting the financial education of the population.
The Role of Public Banking in Financing SMEs_1.pptx
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Zarate presentation on Public Banking - 2009.pptx
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Three power point presentations in Spanish – now being translated – all were delivered at an IADB conference in 2009 in Chile titled, “The Role of Public Banking in SME Financing.”
•Microenterprise and Public Banking
•Zarate presentation on Public Banking – 2009
•Public Banking
“The Competitive Advantages of Alternative Banks”, Mettenheim and Butzbach research presented at the Rockefeller Foundation conference,

“Alternative Banking and Social Inclusion”, Bellagio Center, July 2011 – 11 PP pages

This power point document lays out the distinctions between cooperative and mutual savings banks, public savings/development banks, and joint stock banks. Included as a document are the authors notes on this PP presentation which are listed as “Author Notes on The Competitive Advantages of Alternative Banks”.

“German Perspectives on Alternative Banking and Social Inclusion” Reinhard Schmidt, Goethe University, presented at the Rockefeller Foundation conference, “Alternative Banking and Social Inclusion”, Bellagio Center, July 2011 – 25 PP pages.

This power point presentation explores the nature of alternative banks and what role they should play in an advanced economy. The author concludes that alternative banking is critical for a number of reasons but most importantly to provide diversity in banking structures which will reduce the risk of overly concentrated, market focused banking which history has proven is prone to boom and bust cycles which can be very damaging to the economy overall.