A financial organization known as a state bank is one that the state has incorporated primarily to offer commercial banking services. A state bank is not synonymous with a central or reserve bank, as both organizations focus mainly on influencing a government’s monetary policy.
Economists favored a more significant public sector presence in the financial markets, including Arthur Lewis and Gunnar Myrdal, who supported state banks. They said that the government’s stabilizing influence eliminated the flaws and crises that the financial markets were prone to. State banks thus controlled Western economies until the 1970s.
The 1980s saw a reevaluation of the state’s function due to the rise of neoliberal economists and policymakers. State banks remain among the most prominent government institutions in various parts of the world.
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