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Investment of Firms in Brazil: Do Financial Restrictions, Unexpected Monetary Shocks and BNDES Play Important Roles?

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  • Oliveira, Fernando Nascimento

Abstract

Our objective in this paper is to estimate the dynamics of firm investment in Brazil. For this purpose, we built an original database with confidential and public data containing balance sheet and financial information of 4,876 public and private firms from 1995 to 2010. We then classify these firms as financially restricted or not. Our results show that unexpected monetary shocks, financial restrictions and Brazil´s development bank, BNDES, financing policies are very important to explain the dynamics of investment in Brazil. Our results are robust to several model specifications and econometric techniques.

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  • Oliveira, Fernando Nascimento, 2019. "Investment of Firms in Brazil: Do Financial Restrictions, Unexpected Monetary Shocks and BNDES Play Important Roles?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 73(2), June.
    • Handle: RePEc:fgv:epgrbe:v:73:y:2019:i:2:a:73183
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    1. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
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    3. Blundell, Richard & Bond, Stephen & Devereux, Michael & Schiantarelli, Fabio, 1992. "Investment and Tobin's Q: Evidence from company panel data," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 233-257.
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    Cited by:

    1. Fatma Bouattour, 2020. "Measuring financial constraints of Brazilian industries: Rajan and Zingales index revisited," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(6), pages 677-710, August.
    2. Fatma Bouattour, 2016. "Financial Constraints and Export Performances: Evidence from Brazilian Micro-Data," Working Papers DT/2016/18, DIAL (Développement, Institutions et Mondialisation).
    3. Ferraz, João Carlos & Coutinho, Luciano, 2019. "Investment policies, development finance and economic transformation: Lessons from BNDES," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 86-102.
    4. Gomes, Matheus da Costa & Valle, Mauricio Ribeiro do, 2023. "Do companies that benefit from development banks' funding invest more? New evidence from Brazil," Economic Modelling, Elsevier, vol. 127(C).
    5. de Menezes Barboza, Ricardo & Vasconcelos, Gabriel F.R., 2019. "Measuring the aggregate effects of the Brazilian Development Bank on investment," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 223-236.

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