Relaxing Credit Constraints in Emerging Economies: The Impact of Public Loans on the Performance of Brazilian Manufacturers

Filipe Lage de Sousa and Gianmarco Ottaviano

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: n emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm innovation and productivity growth in manufacturing. Huge amounts of public money are devoted to the removal of such constraints but their effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analyzing the effects of the Brazilian Development Bank (BNDES) loans. Exploiting the unique features of a dataset on BNDES loans to Brazilian manufactures, it finds that: (a) credit constraints facing Brazilian manufacturing firms are real, especially for firms that apply to BNDES repeatedly; (b) BNDES funding has been successful in relaxing those credit constraints; (c) BNDES support has allowed granted firms to match the performance of similar unconstrained firms, at least in the short run, but not to outperform them.

Keywords: credit constraints; firm performance; firm productivity; firm investment; public loans (search for similar items in EconPapers)
JEL-codes: G28 H25 O38 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://cep.lse.ac.uk/pubs/download/dp1309.pdf (application/pdf)

Related works:
Working Paper: Relaxing Credit Constraints in Emerging Economies: The Impact of Public Loans on the Performance of Brazilian Manufacturers (2014)
Working Paper: Relaxing credit constraints in emerging economies: the impact of public loans on the performance of Brazilian manufacturers (2014)
Working Paper: Relaxing credit constraints in emerging economies: The impact of public loans on the performance of Brazilian manufacturers (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1309

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