Regional credit distribution in Brazil: the role of state-owned financial institutions

ABSTRACT

State-owned financial institutions (SFIs) play an important role in regional credit distribution and the promotion of structural change and regional economic development, often contributing to regional convergence. The evolution of SFIs in Brazil after the Second World War, through the 1980s’ debt crisis and 1990s’ financial reform and under Workers Party governments in the new millennium, is outlined. The analysis of a regional credit concentration index from 2010 to 2020 shows that from 2004 to 2015 revived national and subnational SFIs helped drive a phase of regional convergence. Despite their smaller size, subnational SFIs still play a role in regional development as their chief mandate is credit supply.

摘要

巴西的区域信贷分配：国有金融机构的作用。 Area Development and Policy. 在巴西，国有金融机构（SFI）在区域信贷分配，结构变化升级和区域经济发展中发挥着重要作用，这种作用往往有助于区域趋同。本文概述了从第二次世界大战到80年代债务危机，再到90年代的金融改革以及千禧年工党政府领导下巴西SFI的演变，对2010年至2020年区域信贷集中指数进行了分析，分析表明，从2004年至2015年巴西和其次地区SFI的复苏推动巴西进入区域趋同阶段。尽管规模较小，但地方SFI仍然在区域发展中发挥重要的作用，其主要任务是信贷供应。

RESUMEN

Distribución regional del crédito en Brasil: el papel de las instituciones financieras estatales. Area Development and Policy. Las instituciones financieras de propiedad estatal (IFE) desempeñan un papel importante en la distribución regional del crédito y en la promoción del cambio estructural y el desarrollo económico regional y contribuyen a la convergencia regional. La evolución de las IFE en Brasil desde la Segunda Guerra Mundial, pasando por la crisis de la deuda de los 80 y la reforma financiera de los 90 y bajo los gobiernos del Partido de los Trabajadores en el nuevo milenio. El análisis de un índice de concentración crediticia regional de 2010 a 2020 muestra que entre 2004 y 2015 las IFEs nacionales y subnacionales ayudaron a impulsar una fase de convergencia regional. A pesar de su tamaño más pequeño, las IFEs subnacionales todavía juegan un papel en el desarrollo regional ya que su mandato principal es la oferta de crédito.

Аннотация

Региональное распределение кредитования в Бразилии: роль государственных финансовых институтов. Area Development and Policy. Государственные финансовые институты (ГФИ) играют важную роль в региональном распределении кредитования и в содействии структурным изменениям и региональному экономическому развитию, часто способствуя конвергенции регионов. Описана эволюция ГФИ в Бразилии после Второй мировой войны, долгового кризиса 1980-х годов и финансовой реформы 1990-х годов, а также при правительстве Рабочей партии в новом тысячелетии. Анализ индекса региональной кредитной концентрации за период с 2010 по 2020 год показывает, что с 2004 по 2015 год возрождение национальных и субнациональных ГФИ способствовало переходу к фазе региональной конвергенции. Несмотря на меньший размер, субнациональные ГФИ по-прежнему играют важную роль в региональном развитии, поскольку их основной задачей является предоставление кредитов.

KEYWORDS:

• development finance
• public sector
• credit concentration
• regional inequality
• Brazil

关键词:

• 开放性金融
• 政府资助的企事业
• 信贷集中
• 区域不平等
• 巴西

PALABRAS CLAVE:

• financiamiento del desarrollo
• sector público
• concentración crediticia
• desigualdad regional
• Brasil

КЛЮЧЕВЫЕ СЛОВА:

• финансирование развития
• государственный сектор
• кредитная концентрация
• региональное неравенство
• Бразилия

JEL:

• E12
• 011
• R11

ACKNOWLEDGEMENTS

The authors thank the reviewers of this paper and the editor for their valuable contributions, exempting them from any errors that may remain.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. Examples are the China Development Bank (CDB), the Asian Infrastructure Investment Bank (AIIB) and the BRICS’ New Development Bank (NDB). Development finance institutions have been created all around the world, regardless of the country’s economic or financial development stage (Carvalho et al., 2018; Luna-Martinez et al., 2018).

2. Development agencies are non-banking financial institutions that operate similarly to development banks, excepted that they cannot receive deposits from the public or issue bonds.

3. In post-Keynesian theory, banks play a crucial role as they ‘hold the key’ to economic activity. Assuming that money is not neutral, the liquidity preference of financial institutions determines their supply of funds to finance economic growth and investment in capital accumulation. Keynes (1930/71) discusses in depth the role of banks and the liquidity problem, showing that banks are not just saving–lending institutions, but have a more active role in the productive system. With the introduction of the principle of effective demand in The General Theory of Employment, Interest and Money (1936/73), Keynes reversed the dominant view of the role of savings as a source of funds for investments. This inversion had important implications for understanding how banks and firms interact and consequently of the role of the banking system in national and regional development. In a word, the supply of credit was assumed to be an essential driver of economic growth once it provides support to aggregate demand.

4. An alternative line of reasoning claims that SFI operations should be limited. Torres and Zeidan (2016) point out that the justification for the existence of SFIs is to correct market failures and that their role should decrease as the financial market is developed, lest generating government failures occur. These failures are assumed to be much worse than market failures. Furthermore, these authors argue that strong SFIs may prevent the improvement of the private market, causing irreparable distortions in the financial sector. Their position is that SFIs should be confined to the first step in the initial period of the investment process. Lazzarini et al. (2015) add that although SFIs have the mission to operate at the industry level, they end up operating at the firm level and endorsing political interests – the rent-seeking hypothesis.

5. If they transferred money in the opposite direction, financial institutions could play a decisive role by extending the effects of the economic expansion of the most developed areas to less developed ones.

6. The Banco do Brasil was created when the Portuguese royal family moved to Brazil, fleeing the Napoleonic wars in Europe. Court needs demanded the existence of a financial institution.

7. The BNB’s original purposes were the allocation of funds to deal with the recurrent drought in the Northeast region and the development of productive activities aligned with the national economy. Additionally, it operated in a mixed way, performing the functions of both commercial and development banks (Valias Neto & Cosentino, 2014). From 1989, the BNB became responsible for managing the Constitutional Financing Fund of the Northeast (FNE). The Banco da Amazônia was initially set up in partnership with the US government primarily to fund the exploitation of Amazon rubber. The bank assumed its current delineation as an SFI only from 1966 when it started to play the role of financial agent of the public policy for the development of the Amazon region. From the 1990s, this institution came to operate with the resources of the Constitutional Fund for Financing the North (FNO), which had been created in 1989 (Banco da Amazônia, 2014).