This explanation needs to be viewed in conjunction with the differential ownership profile of banks. Early studies (Sarkar et al., 1998) found somewhat weak evidence to suggest that ownership was an important determinant of performance.
More recent studies exhibit mixed evidence: while certain studies (Keova, 2003) suggest ownership to have some effect on bank performance, others (e.g., Bhaumik and Dimova, 2004) veer around the view that competition induced public sector banks to eliminate the performance gap that existed between them and both domestic and foreign and private sector banks.