Credit Stabilization Through Public Banks: The Case of Banco Estado

Luis Felipe Lagos and Matias Tapia

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This paper analyzes the role played by BancoEstado in providing credit during the 2008-2009 financial crisis. An analysis of the data shows that BancoEstado increased its credit significantly, particularly in terms of loans to firms, increasing its market share and remaning profitable. A large share of BancoEstado’s credit expansion was directed to large firms. While this was probably efficient in terms of maximizing the bank’s long-term value, it might have been at odds with the ultimate objective of stabilizing the credit contraction for firms facing liquidity constraints. We find no evidence of BancoEstado’s credit expansion on the credit decisions of private banks.

Date: 2014-08
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Chapter: Credit Stabilization through Public Banks: The Case of BancoEstado (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:740

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