Bank Ownership, Lending, and Local Economic Performance During the 2008-2010 Financial Crisis

Nicholas Coleman () and Leo Feler

No 1099, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: While the finance literature often equates government banks with political capture and capital misallocation, these banks can help mitigate financial shocks. This paper examines the role of Brazil?s government banks in preventing a recession during the 2008-2010 financial crisis. Government banks in Brazil provided more credit, which offset declines in lending by private banks. Areas in Brazil with a high share of government banks experienced increases in lending, production, and employment during the crisis compared to areas with a low share of these banks. We find no evidence that lending was politically targeted or that it caused productivity to decline in the short-run.

Keywords: Credit; financial crises; state-owned banks; local economic activity (search for similar items in EconPapers)
Pages: 55 pages
Date: 2014-03-05
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-eff and nep-mac
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1099

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