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Measuring the aggregate effects of the Brazilian Development Bank on investment

Ricardo Barboza () and Gabriel F.R. Vasconcelos

The North American Journal of Economics and Finance, 2019, vol. 47, issue C, 223-236

Abstract: In this paper, we show that the Brazilian Development Bank (BNDES), one of the largest development banks in the world, had a positive and statistically significant impact on Brazilian aggregate investment during the 2002–2016 period. Each $1 BRL of BNDES loans increased the investment on average by $0.46 BRL. Our results lie between what is alleged by BNDES critics (zero impact) and what is claimed by unconditional advocates of state-owned banks (impact near one). In addition, our results are compatible with micro evidence on the effects of BNDES. We obtained these results using the impulse responses from a large Bayesian VAR and we used double selection inference for robustness.

Keywords: Development banks; Investment; Governmental loans Bayesian VAR (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:ecofin:v:47:y:2019:i:c:p:223-236