Political Connections and Access to Brazilian Development Bank’s Loans

Andre Medeiros Sztutman and Dante Mendes Aldrighi ()

No 2019_13, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: Prior studies suggest that politically connected firms manage to buy the access to subsidized loans from the Brazilian Development Bank (BNDES) by financing candidates to federal deputies in election campaigns. Nonetheless, and although firms that most donated to these candidates were indeed the same that subsequently most tapped BNDES’ subsidized credit, no anecdotal piece of information has been reported referring to deputies being accused of interfering in BNDES lending policy to benefit their donors. Proxying political connections by the 100 largest Brazilian business groups’ donations to candidates in the 2006 election for the House of Representatives, we also documented a positive correlation between these groups’ donations and the amount they borrowed from the bank. However, carrying out regression discontinuity analysis, we found no evidence that federal deputies elected by a small margin of votes had systematically affected BNDES credit allocation decisions. The discrepant empirical results may indicate the influence on the access to the bank’s loans through political connections other than direct donations to winning federal deputies.

Keywords: Election campaign donations; development banks; subsidized credit; regression discontinuity design. (search for similar items in EconPapers)
JEL-codes: D72 G38 H81 (search for similar items in EconPapers)
Date: 2019-04-01
New Economics Papers: this item is included in nep-pol
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