Macroeconomic and Financial Consequences of the Post-Crisis Government-Driven Credit Expansion in Brazil

Abstract

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Relaxing credit constraints in emerging economies: The impact of public loans on the productivity of Brazilian manufacturers

“…As we will show in Section 3.2.1, BNDES beneficiaries tend to be larger firms. See Bonomo et al (2015) for further analysis on this particular issue. 23 All firms that have received financial support through Subscription of Securities are deleted from our sample as our focus is on firms implementing projects.…”

The New Brazilian Economy

“…This includes credit to capital-constrained fi rms and social intensive sectors. 7 However, recent empirical analyses and econometric studies strongly support the idea that BNDES' operations do not maximize social welfare (Bonomo et al 2014 ;Lazzarini et al 2015 ;Mello and Garcia 2012 ;Sousa 2010). BNDES channels 67 % of its total disbursements to large enterprises that can fund their projects with other sources of capital.…”

“…Monopolistic fi rms Source: Authors' elaboration based on data from banks' annual reports and Bloomberg have 18 % higher chances of receiving loans from the BNDES than other fi rms-their chances were 11 % higher before 2007. Additionally, BNDES reduced its relative participation in social intensive sectors by 25 % after the international crisis (Bonomo et al 2014 ). Resources allocated to large "national champions" could still be justifi ed if loans and equity capital had a positive effect on fi rms' performance, investment or productivity, funding their riskier projects and boosting innovation.…”

“…Resources allocated to large "national champions" could still be justifi ed if loans and equity capital had a positive effect on fi rms' performance, investment or productivity, funding their riskier projects and boosting innovation. But data shows no signifi cant effect of BNDES loans and equity capital on fi rms' profi tability, market valuation (Lazzarini et al 2015 ), productivity (Sousa 2010), or investment and capital expenditures (Bonomo et al 2014 ;Lazzarini et al 2015 ). There is simply no evidence that services provided by the BNDES stimulate potential output growth.…”

“…There is simply no evidence that services provided by the BNDES stimulate potential output growth. Rather, evidence suggests publicly listed fi rms are borrowing long term to either reduce capital costs or even benefi t from interest rate arbitrage profi t (Bonomo et al 2014 ).…”