The economic impact of subsidized credit on regional development: Evidence from Brazil's Northeast Constitutional Financing Fund (FNE), 2010–2022

Tatiane Da Silva () and Wellington Ribeiro Justo ()
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Tatiane Da Silva: PPGERU-URCA
Wellington Ribeiro Justo: URCA/UFPE

Economics Bulletin, 2025, vol. 45, issue 3, 1389 - 1396

Abstract: This study evaluates the economic effects of Brazil's Northeast Constitutional Financing Fund (FNE) on growth and employment in the SUDENE region from 2010 to 2022. Using a generalized propensity score (GPS) dose-response model, we find that FNE credit significantly increases GDP, GDP per capita and employment, with larger effects in less developed states. The analysis reveals non-linear impacts, with diminishing marginal returns at higher credit levels, highlighting the role of the FNE in mitigating regional disparities. These findings provide actionable insights for policymakers in credit-constrained regions.

Keywords: Subsidized Credit; Regional Development; FNE; Dose-Response Model; Brazil (search for similar items in EconPapers)
JEL-codes: O1 R1 (search for similar items in EconPapers)
Date: 2025-09-30
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