Measuring Financial Restrictions of Brazilian Private Firms with Microdata: a Contract Theory Approach

Fernando Oliveira

No 655, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: This study develops original measures of financial constraints for a sample of 6,215 private firms in Brazil spanning the period from 2012 to 2022. To construct these metrics, I utilize a granular dataset comprising 11,967,603 loan contracts between these firms and financial institutions. Following theoretical framework of Bester (1985), my identification strategy is based on relative interest rates and collateral requirements within the credit agreements. Using these constraints, I estimate firms' investment demand and provide empirical evidence that financial frictions exert a statistically significant negative effect on capital expenditure.

Date: 2026-10
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