Optimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millenniaOptimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millennia Peer-Reviewed Journal Publication Δημοσίευση σε Περιοδικό με Κριτές 2022-11-232021enPrevious literature is rather inconclusive concerning the impact of state ownership on banks. We report that its overall impact is not monotonic as it has so far been implicitly assumed, and that it depends on a contemporaneous conflicting impact on risk and financial performance. This suggests the existence of an optimal level, which we investigate by comparing the relative “overall performance” and efficiency of the institutions. We show that a minimal presence, as opposed to no state ownership can improve performance and efficiency, reduce the likelihood of a bailout, while it is less costly compared to capital injections.http://creativecommons.org/licenses/by/4.0/Annals of Operations Research3041-2165–197 Galariotis, Emilios, 19..- Kalaitzoglou, Iordanis Angelos Niklewski Jacek Zopounidis Konstantinos Ζοπουνιδης Κωνσταντινος Springer State ownership Optimal level Bank efficiency Indirect impact bank regulation Macroeconomic shocks