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I mercati azionari e le privatizzazioni in Europa

Share Markets and Privatizations in Europe

Anno XXIII, n. 102, luglio-settembre 1988
Centro Einaudi


Abstract disponibile solo in lingua inglese

The paper has two aims. First, it reviews the way in which the major privatization processes of the early eighties resorted to the share market. Secondly, it attempts to assess the effects of modified market conditions—as a result of the Stock Market slump in October 1987—on the prospects of this process. In the period considered, privatization processes have been a phenomenon common to the whole world. In Europe and Japan, however, their significance has been especially noteworthy. In England and France, in particular, these processes have assumed important ideological connotations. In general, however, they are the fruit of strictly economic considerations deriving from the unsatisfactory performance of public companies and financial considerations deriving from the need to cover public deficits. The main concern was that share markets would be unable to absorb privatization programmes. This fear has proved, however, to be unfounded. In fact, privatizations have seen an increase in volume of transactions on share markets accompanied by higher prices and lower rates of interest. In the meantime, private enterprises have been able to count upon more, and not less, risk capital at a lower cost.
The effects of the Stock Market slump on privatizations are assessed in two ways. First, analysis is made of the effect of modifications to share markets upon share allocation processes and the conditions in which such processes take place. The conclusion is that large-scale privatizations will have greater costs but will provide fewer benefits than in the past. Secondly, in a more general perspective, an attempt is made to evaluate the impact of the post-slump situation upon the decision-making processes which lead to privatizations. The conclusion is that, from this viewpoint, the greatest threat, not only for privatization processes but also for the recent European trend towards liberalization, comes from a different perception of risk and changes in the way in which single investors and society as a whole are prepared to sustain this risk.