Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/115515 
Year of Publication: 
2015
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-551
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
Government-driven credit played an important role in countervailing the private credit crunch in Brazil during the recent financial crisis. However, government credit concessions continued to expand after the economy recovered. This paper investigates some important features of this expansion using a huge repository of loan contracts between banks and firms, composing an unbalanced panel of almost 1 million firms between 2004 and 2012. The results show that larger, older and less risky firms have benefited most from the government-sponsored credit expansion. Additionally, although higher access to earmarked credit tends to lead to higher leverage, the effect on investment appears to be insignificant for publicly traded firms. Since interest rates on earmarked loans are lower than market interest rates, firms with higher access to this type of loan tend to lower the cost of debt.
Subjects: 
Crisis management
State ownership of banks
Investment
JEL: 
G20
H1
L3
O16
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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