The growth of government intervention in the operation of the economy has fascinated economists for many years, consequently a vast array of economic literature has examined many aspects of intervention. Over the past decade, State governments have greatly increased their presence in the financial markets through several key institutions. A brief history of the economic conditions surrounding the evolution of the State Financial Corporation is presented before evaluating the economics of State Financial Corporations. The activities of government, bureaucracy and vested interests are considered endogenous to the economic system. Economic agents are assumed to be rational self-interested utility maximizers and policy reflects the utility functions of those who influence the decision-making process. From this theoretical perspective, the State Financial Corporations adopted in Queensland, Victoria and Western Australia are examined and a common pattern emerges. For this reason, State Financial Corporations have been analyzed in terms of a "life cycle" which has four distinct stages, gestation, formation, drive to maturity (growth) and decline.