The agency view relates to the agency costs in government bureaucracy that may result in managerial inefficiency (Banerjee (1997), Hart, Shleifer and Vishny (1997)). Various studies have also been conducted to assess the impact of government ownership on banks.
Caprio and Marinez (2000) demonstrated that government ownership is significantly and positively associated with increases in bank fragility; Barth, Caprio and Levine (2004) found no conclusive evidence on the relationship between government ownership in banks and the likelihood of a banking crisis.