This paper examines the widespread government ownership of banks in many countries and its impact on financial systems and economic development. The authors find that government ownership of banks is significant and prevalent globally, particularly in countries with low per capita income, underdeveloped financial systems, interventionist and inefficient governments, and poor property rights protection. They conclude that government ownership of banks is associated with slower financial development and lower subsequent growth in per capita income, specifically lower productivity growth rather than slower factor accumulation. These findings support the "political" view that government ownership of banks politicizes resource allocation, leading to inefficiencies and lower economic efficiency. The study also highlights the negative effects of government ownership on resource allocation and economic growth, consistent with recent literature on financial development and economic growth.This paper examines the widespread government ownership of banks in many countries and its impact on financial systems and economic development. The authors find that government ownership of banks is significant and prevalent globally, particularly in countries with low per capita income, underdeveloped financial systems, interventionist and inefficient governments, and poor property rights protection. They conclude that government ownership of banks is associated with slower financial development and lower subsequent growth in per capita income, specifically lower productivity growth rather than slower factor accumulation. These findings support the "political" view that government ownership of banks politicizes resource allocation, leading to inefficiencies and lower economic efficiency. The study also highlights the negative effects of government ownership on resource allocation and economic growth, consistent with recent literature on financial development and economic growth.