Subnational government banks profitability in Brazil between 2003 and 2019

Daniel Diniz Oliveira (), Lauro Gonzalez () and Tiago Couto Porto ()

Brazilian Journal of Political Economy, 2025, vol. 45, issue 3, 421-443

Abstract: The role of public banks in the economy has been extensively discussed in the literature.Within this debate, one of the primary criticisms of these financial institutions istheir lower profitability compared to private peers. In Brazil, the subnational commercialgovernment-owned banks remain one of the least studied bank categories, particularly followingthe financial crises they encountered in the 1980/90s. This article aims to empiricallyinvestigate the effect of the subnational government-owned control on banks’ performancein a more recent timeframe. Contrary to the conventional literature, the results provide evidencethat this control positively impacts profitability. JEL Classification: G21; G32; L30.

Keywords: Subnational government banks profitability; government banks profitability; development emerging economies; Brazilian banking system (search for similar items in EconPapers)
Date: 2025
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