Bank ownership, lending, and local economic performance during the 2008–2009 financial crisis

Nicholas Coleman () and Leo Feler

Journal of Monetary Economics, 2015, vol. 71, issue C, 50-66

Abstract: Although government banks are frequently associated with political capture and resource misallocation, they may be well-positioned during times of crisis to provide counter-cyclical support. Following the collapse of Lehman Brothers in September 2008, Brazil׳s government banks substantially increased lending. Localities in Brazil with a high share of government banks received more loans and experienced better employment outcomes relative to localities with a low share of government banks. While increased government bank lending mitigated an economic downturn, we find that this lending was politically targeted, inefficiently allocated, and reduced productivity growth.

Keywords: Credit; Financial crises; State-owned banks; Local economic activity (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (76)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:71:y:2015:i:c:p:50-66

DOI: 10.1016/j.jmoneco.2014.11.001

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