What do state-owned development banks do? Evidence from BNDES, 2002-09

Lazzarini, Sérgio G.; Musacchio, Aldo; Bandeira-de-Mello, Rodrigo; Marcon, Rosilene

Article (Journal/Review)

Fecha

2014

Registro en:

0305-750X

http://hdl.handle.net/10438/25432

10.1016/j.worlddev.2014.08.016

2-s2.0-84907760425

http://repositorioslatinoamericanos.uchile.cl/handle/2250/2687657

Autor

Lazzarini, Sérgio G.

Musacchio, Aldo

Bandeira-de-Mello, Rodrigo

Marcon, Rosilene

Institución

Fundação Getulio Vargas (Brasil)

Resumen

Defendants of state-owned development banks emphasize their role in reducing capital constraints and fostering productive investment; detractors point out that they may benefit politically connected capitalists or bail out inefficient firms. We study the effect of loans and equity investments of the Brazilian National Development Bank (BNDES) and find that they do not have any consistent effect on firm-level performance and investment, except for a reduction in financial expenditures due to the subsidies accompanying loans. However, BNDES does not systematically lend to underperforming firms. Our results indicate that BNDES subsidizes firms that could fund their projects with other sources of capital.