However, the problem of personal ties and political factors influencing the loan decision does not mean that financial institutions necessarily need to be privately operated as has long been argued by the Bretton Woods institutions (. World Bank 2001). Historical experience in a number of countries such as Chile (in the deregulation attempt of the 1980s) or in Indonesia (in the 1990s) show that a privatized banking sector does not necessarily allocate loans according to economic merit of the borrower. 19 Instead, in these countries, conglomerates often just owned or acquired their own bank which in turn financed the conglomerate irrespective.
