Abstract

Barely five years after its inception, the privatisation programme in Malawi was temporarily suspended in 2001. Government decided to suspend the program after the public questioned the benefits and expressed the fears of the negative impact of privatisation. This study contributes to the few available literature on the impact of privatisation in Malawi. This dissertation evaluates the impact of privatisation on the financial performance and operating efficiency of four privatised banks, one private bank and one state-owned bank, using panel data covering the period from 1994 to 2004. The dissertation specifically investigates the impact of bank privatisation on profitability, operating efficiency, investment intensity, output and employment. The hypotheses, were tested using statistical analysis and estimation of an econometric equation using Feasible Generalized Least Squares (FGLS) method. The results of our empirical analysis show that there is no significant evidence that bank privatisation in Malawi is associated with high profitability, high output, improved net income efficiency, low deposits-assets ratio and low employment levels. We find significant evidence that investment intensity and gross labour productivity increased in the post privatisation period. Using regression analysis of the determinants of bank profitability, we find that bank privatisation in Malawi is associated with low profitability and that other factors which include state ownership and market share, significantly impact on bank profitability. We also find privatisation has industry effects.

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School	: School of Law, Economics and Government
Issued Date	: 2006

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