Abstract

The paper discusses two theoretical approaches to the role of public banks (PBs): the Shaw-McKinnon model and an alternative Keynesian view. In the former, the PBs still in operation in less developing countries would be near to become fully unnecessary, in view of the advance of their financial development in the last twenty years. In the Keynesian approach this hypothesis is unlikely. Financial markets are viewed as structurally inefficient and “incomplete” for the requirements of the process of economic development. Nevertheless, it is undeniable that economic and financial development will require a definition of new strategies for PBs. The paper is concluded with a brief discussion of this issue.

JEL classification: O16; G28; H81.