 COVID-19, policy interventions and credit: The Brazilian experienceLars Norden, Daniel Mesquita and Weichao Wang Journal of Financial Intermediation, 2021, vol. 48, issue C Abstract: The COVID-19 pandemic caused a global health and economic crisis to which governments responded with massive policy interventions. Using Brazil as a testing ground, we investigate the influence of the pandemic and ensuing policy interventions on local credit markets. First, we find that the pandemic has a significantly negative impact on local credit. Second, using a novel manually collected database on the staggered municipal government policy interventions, we show heterogenous effects of interventions: positive effects of soft interventions (e.g., social distancing and mass gathering restrictions) and late reopening, and negative effects of hard interventions (e.g., closure of non-essential services) and early reopening. Third, we find that state-owned banks grant more local credit than privately owned banks during the COVID-19 crisis but this difference is less pronounced than it was in the 2008 Financial Crisis. We confirm our results using pre-pandemic local political preference as instrument for policy interventions and orthogonalized policy intervention indicators, and in placebo tests. Keywords: COVID-19 crisis; Policy interventions; Credit; Banks; Loans (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:48:y:2021:i:c:s1042957321000346 DOI: 10.1016/j.jfi.2021.100933 Access Statistics for this article Journal of Financial Intermediation is currently edited by Elu von Thadden More articles in Journal of Financial Intermediation from Elsevier |
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