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

Filipe Lage de Sousa and Gianmarco Ottaviano

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

Abstract: In emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm productivity growth in manufacturing. Huge amount of public money is devoted to the removal of such constraints but its effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analyzing the effects of the Brazilian Development Bank (BNDES) loans. Exploiting the unique features of a dataset on BNDES loans to Brazilian manufactures, it finds that credit constraints facing Brazilian manufacturing firms are real, in particular for firms that apply to BNDES repeatedly, and BNDES support has allowed granted firms to match the performance of similar unconstrained firms but not to outperform them.

Keywords: Credit constraints; Firm productivity; Public loans; BNDES (search for similar items in EconPapers)
JEL-codes: G28 H25 O38 (search for similar items in EconPapers)
Date: 2017-11-15
New Economics Papers: this item is included in nep-eff and nep-fdg
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Published in International Economics, 15, November, 2017. ISSN: 2110-7017

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Journal Article: Relaxing credit constraints in emerging economies: The impact of public loans on the productivity of Brazilian manufacturers (2018)
Journal Article: Relaxing credit constraints in emerging economies: The impact of public loans on the productivity of Brazilian manufacturers (2018)
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