In Franklin Allen’s initial post he noted that “public banks would also be able to provide loans to businesses—particularly small and medium size enterprises—through the crisis.” Subsequent commenters have also suggested that state-owned banks could play an important role in expanding access to financial services, or maintaining access to typically underserved segments of society during a crisis. And yet the empirical record provides no strong evidence in favor of state-owned banks promoting financial inclusion. As Sole Martinez commented in response to Charlie’s initial post, her research with Asli and Thorsten Beck shows no significant association between greater government ownership of banks and financial access across countries. With respect to lending to small and medium size enterprises, work that Sole and I did with George Clarke and Susana Sanchez showed that public banks in Latin America (Argentina, Chile, Colombia) were less likely to lend to SMEs than private domestic banks. We also failed to find a significant link between the share of banking sector assets held by state-owned banks and the severity of financial constraints reported by firm owners across 35 developing and transition countries. During the current crisis, Brazil was often pointed to as a country that weathered the storm relatively well. No doubt, state-owned banks do compose a large share of the Brazilian banking system and those banks did ramp up their lending while that of foreign and private domestic banks operating in Brazil flatlined, or declined slightly. However, our preliminary analysis of a large survey of Brazilian households shows that those located in areas where the network of public bank branches was relatively dense fared worse than others in terms of access to credit, and the effects were especially pronounced for self-employed people. Granted, there are methodological difficulties in establishing a causal link between the presence of state-owned banks and access to financial services for SMEs. For example, we do not know how Brazilian households would have fared in the absence of state-owned banks and their increased lending. And the existence of state-owned banks might not be exogenous to financial inclusion. But none of the evidence suggests that countries with large shares of state-owned banks fare particularly well in terms of financial outreach. In Kenya, a country Franklin and I are coming to know better as part of a new project, the outreach of the financial system has expanded rapidly in recent years. But that was due to M-PESA, a payments system based on mobile telephony, and to Equity Bank, both private endeavors. Despite having relatively extensive branch presence in underserved areas, the state-owned banks (which maintain around a quarter of Kenya’s banking sector assets) were not the catalysts for the increase. In his follow-up Franklin clarified that he is suggesting a more limited role for state-owned banks than his initial post seemed to indicate. But even in this limited role, it will not be easy for public banks to promote financial inclusion and to support small and medium size enterprises during crises. Lending to this market segment is notoriously difficult and costly, and it is unclear whether state-owned banks are the best vehicle for doing so. I agree with other commenters that ultimately it comes down to the mandates, incentives, management, and oversight of the state-owned banks. At the same time, based on the evidence that I know of, you can count me with Charlie among the skeptics, at least for now.