Lending and regional growth in Brazil: the development bank BNDES versus private and public banks
DOI:
https://doi.org/10.1590/1980-53575232pgvKeywords:
Development banks, State-owned banks, Regional growth, BNDESAbstract
The present paper distinguishes how the type of bank that provides loans is related to GDP per capita in Brazilian municipalities between 2007 and 2016. A unique data set allows us to discriminate between the effects of credits operated by either private or public commercial banks, and loans provided by the national development bank BNDES either directly or indirectly through accredited financial institutions. Using the system GMM estimator, we find that credit from public commercial banks has the highest effect on economic growth but it is concentrated in the most populated municipalities. Moreover, indirect BNDES loans show a robust and significantly positive relation to local GDP given that this lending facility especially targets firms in small, credit constrained regions, and it was provided non-cyclically.
Downloads
References
ACEMOGLU, D.; NAIDU, S.; RESTREPO, P.; ROBINSON, J. A. (2019). Democracy does cause growth. Journal of Political Economy, 127 (1), 47-100.
ARELLANO, M.; BOND, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58 (2), 277-297.
BANERJEE, A. J.; DUFLO, E. (2014). Do Firms Want to Borrow More? Testing Credit Constraints Using a Directed Lending Program. Review of Economic Studies, 81 (2), 572-607.
BARBOZA, R. d. M., FURTADO, M., GABRIELLI, H. (2019). A atuação histórica do BNDES: o que os dados têm a nos dizer?. Brazilian Journal of Political Economy 39 (3), 544-560.
BARBOZA, R. D. M.; PESSOA, S. D. A.; RIBEIRO, E. P.; e ROITMAN, F. B. (2020). O que aprendemos sobre o BNDES? BNDES Textos para Discussão 149.
BECK, T., and LEVINE, R. (2002). Industry growth and capital allocation:: does having a market-or bank-based system matter?. Journal of Financial Economics, 64 (2), 147-180.
BECK, R., GEORGIADIS, G., and STRAUB, R. (2014). The finance and growth nexus revisited. Economics Letters, 124 (3), 382-385.
BERGER, A. N.; HASAN, I.; ZHOU, M. (2008). Bank ownership and efficiency in China: What will happen in the world’s largest nation?. Journal of Banking & Finance, 50, 326-339.
BERTAY, A. C.; DEMIRGÜÇ-KUNT, A.; HUIZINGA, H. (2014). Bank Ownership and Credit Over the Business Cycle: Is Lending by State Banks Less Procyclical?. Journal of Banking & Finance. 50, 326-339.
BEZEMER, D., GRYDAKI, M., ZHANG, L. (2016). More mortgages, lower growth?. Economic Inquiry, 54(1), 652-674.
BLUNDELL, R.; BOND, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143.
BONOMO, M.; BRITO, R.; MARTINS, B. (2014). Macroeconomic and Financial Consequences of the After Crisis Government-Driven Credit Expansion in Brazil. Banco Central do Brasil Working Papers, n. 378.
BURGSTALLER, J. (2013) Bank Office Outreach, Structure and Performance in Regional Banking Markets, Regional Studies, 47(7), 1131-1155
CARVALHO, D. (2014). The Real Effects of Government-Owned Banks: Evidence from an Emerging Market. Journal of Finance, 69 (2), 577-609.
CAVALCANTI, T.; VAZ, P. H. (2017). Access to Long-Term Credit and Productivity of Small and Medium Firms: A Causal Evidence. Economics Letters, 150, 21-25.
COLE, S. (2009). Financial Development, Bank Ownership, and Growth: Or, Does Quantity Imply Quality?. Review of Economics and Statistics, 91 (1), 33-51.
CROCCO, M.; FARIA-SILVA, F.; PAULO-REZENDE, L.; RODRÍGUEZ-FLUENTES, C. J. (2014). Banks and Regional Development: An Empirical Analysis on the Determinants of Credit Availability in Brazilian Regions. Regional Studies. 48 (5), 883–895.
DE AGHION, B. A. (1999). Development banking. Journal of Development Economics, 58 (1), 83-100.
DE GUEVARA, J. F.; MAUDOS, J. (2009). Regional Financial Development and Bank Competition: Effects on Firms’ Growth. Regional Studies, 43 (2), 211-228.
DINÇ, S. (2005). Politicians and Banks: Political Influences on Government – Owned Banks in Emerging Markets. Journal of Financial Economics, 77 (2), 453-479.
EHRL, P. (2021). Live large or die young: subsidized loans and firm survival in Brazil. Empirical Economics, 61, 3479–3503.
EHRL, P.; MONASTERIO, M. (2019). Empréstimos do BNDES e a sobrevivência de empresas. IPEA Working Paper Nº 2518.
EHRL, P.; & PORTUGAL, R. (2021). Distribuição de crédito e crescimento no Nordeste: Uma comparação entre BNDES e BNB 2010-2019. IPEA Working Paper No. 2678.
FACCIO, M. (2006). Politically Connected Firms. American Economic Review, 96 (1), 369-386.
GERTLER, M.; GILCHRIST, S. (1994). Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms. Quarterly Journal of Economics, 109 (2), 309-340.
GRIFFITH-JONES, S. (2016). Development banks and their key roles. Bread for the World Discussion Paper nº 59.
GRIMALDI, D. S.; MADEIRA, R. F. (2016). Financiamento de longo prazo e bancos públicos: uma análise dos repasses do BNDES Finame no período 2005-2015. Revista do BNDES, 46, 5-38.
GUTIERREZ, E.; RUDOLPH, H. P.; HOMA, T.; BENEIT, E. B. (2011). Development Banks: Role and Mechanisms to Increase their Efficiency. Policy Research Working Papers, nº 5729.
KARLAN, D., ZINMAN, J. (2009). Expanding credit access: Using randomized supply decisions to estimate the impacts. Review of Financial Studies, 23 (1), 433-464.
KLAGGE, B., MARTIN, R. (2005). Decentralized versus centralized financial systems: is there a case for local capital markets? Journal of Economic Geography, 2005, 5(4), 387-421.
LA PORTA, R.; LOPEZ DE SILANES, F.; SHLEIFER, A. (2002). Government Ownership of Banks. Journal of Finance, 57 (1), 265-301.
LAZZARINI, S. G.; MUSACCHIO, A.; BANDEIRA DE MELLO, R.; MARCON, R. (2015). What Do State-Owned Development Banks Do? Evidence from BNDES, 2002–09. World Development, 66, 237–253.
LEVINE, R. (2005) Finance and growth: theory and evidence. Handbook of Economic Growth, Ed. 1., 865-934.
LIMA, R.C. A.; SILVEIRA NETO, R. M. (2016). Physical and Human Capital and Brazilian Regional Growth: A Spatial Econometric Approach for the Period 1970–2010. Regional Studies, 50 (10), 1688–1701.
MCKENZIE, D.; WOODRUFF, C. (2008). Experimental Evidence on Returns to Capital and Access to Finance in Mexico. World Bank Economic Review, 22 (3), 457-482.
MESLIER-CROUZILLE, C., NYS, E. and SAUVIAT A. (2012) Contribution of Rural Banks to Regional Economic Development: Evidence from the Philippines, Regional Studies, 46(6), 775-791
MUSACCHIO, A.; LAZZARINI, S.; MAKHOUL, P; SIMMONS, E. (2017) The Role and Impact of Development Banks: A Review of their Founding, Focus, and Influence. Study for the World Bank.
PAIVA, M. D. (2012) BNDES: um banco de história e do futuro. São Paulo: Museu da Pessoa.
ROODMAN, D. (2009). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 71 (1), 135-158.
RU, H. (2018). Government Credit, a Double-Edged Sword: Evidence from the China Development Bank. Journal of Finance, 73 (1), 275-316.
SAPIENZA, P. (2004). The effects of government ownership on bank lending. Journal of Financial Economics, 72(2), 357-384.
SEAE - SECRETARIA DE ACOMPANHAMENTO ECONÔMICO DO MINISTÉRIO DA FAZENDA. (2017). Nota Técnica: Benefícios Financeiros e Creditícios da União. Brasília.
STIGLITZ, J. E. (1993) The role of the state in financial markets. World Bank Economic Review, 7 (1), 19-52.
SZTUTMAN, A. M., Aldrighi,D. M. (2019). “Political Connections and Access to Brazilian Development Banks Loans.” Working Papers, Department of Economics 2019_13. University of São Paulo (FEA-USP).
TAROZZI, A., DESAI, J., JOHNSON, K. (2015). The impacts of microcredit: Evidence from Ethiopia. American Economic Journal: Applied Economics, 7(1), 54-89.
ULYSSEA, G. (2018). Firms, Informality, and Development: Theory and Evidence from Brazil. American Economic Review, 108(8), 2015-47.
USAI, S., VANNINI, M. (2005) Banking structure and regional economic growth: lessons from Italy. The Annals of Regional Science, 39(4), 691-714.
VALVERDE, S. C., LÓPEZ DEL PASO, R., RODRÍGUEZ FERNÁNDEZ, F. (2007) Financial innovations in banking: Impact on regional growth. Regional Studies, 41(3), 311-326.
WORLD BANK. (2001). Finance for Growth: Policy Choices in a Volatile World. New York: Oxford University Press.
WORLD BANK. (2012). Global Financial Development Report 2013 – Rethinking the role of the state in finance.
Washington, DC: The World Bank.
Published
Issue
Section
License
Copyright (c) 2022 Philipp Ehrl, Greisson Almeida Pereira, Vinícius Vizzotto Zanchi
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
By submitting an article, the author authorizes its publication and attests that it has not been submitted to any other journal. The original article is considered final. Articles selected for publication are proofread for grammatical and orthographic errors. The journal does not pay rights for published articles. The Institute of Economic Research from the School of Economics, Business and Accounting of the University of São Paulo (Instituto de Pesquisas Econômicas da Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo) owns the journal's copyright.
