Relaxing credit constraints in emerging economies: the impact of public loans on the performance of Brazilian manufacturers

Philip Lage de Sousa and Gianmarco Ottaviano

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Especially in developing countries credit constraints are often perceived as one of the most important market frictions constraining firm innovation and growth. Huge amounts of public money are being devoted to the removal of such constraints but their effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analysing the effects of the Brazilian Development Bank (BNDES) loans. It finds that, before receiving BNDES support, granted firms are indeed more credit constrained than comparable non-granted firms. It also finds that BNDES support allows granted firms to achieve the same level of performance as similar non-granted firms that are not credit constrained. However, it does not allow granted firms to outperform similar non-granted ones.

Keywords: Heterogeneous firms; productivity; public policy analysis; credit constraints (search for similar items in EconPapers)
JEL-codes: H00 O38 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014-10
New Economics Papers: this item is included in nep-cse and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://eprints.lse.ac.uk/60529/ Open access version. (application/pdf)

Related works:
Working Paper: Relaxing Credit Constraints in Emerging Economies: The Impact of Public Loans on the Performance of Brazilian Manufacturers (2014)
Working Paper: Relaxing Credit Constraints in Emerging Economies: The Impact of Public Loans on the Performance of Brazilian Manufacturers (2014)
Working Paper: Relaxing credit constraints in emerging economies: The impact of public loans on the performance of Brazilian manufacturers (2014)
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