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Granular banks and corporate investment

Author

Listed:
  • Adriano Maia

    (Federal University of Santa Catarina)

  • Guilherme De Oliveira

    (Federal University of Santa Catarina
    Federal University of Santa Catarina)

  • Raul Matsushita

    (University of Brasilia
    University of Brasilia)

  • Sergio Da Silva

    (Federal University of Santa Catarina
    Federal University of Santa Catarina
    Federal University of Espirito Santo)

Abstract

We examine the explanatory power of the granular residual of the five main Brazilian banks from 2010 to 2019 on corporate investment. Approximately two-thirds of the total investment rate is attributable to idiosyncratic shocks to the overall operating revenues of these banks, according to our results. Because the Brazilian banking industry is more concentrated, this proportion is higher than that discovered in a study for Japan. In addition, the explanatory power rises when typical monetary and fiscal macroeconomic shocks are added, and the number of microeconomic shocks associated with the banking granular residual exceeds the number of fiscal shocks and monetary shocks. A policy implication is that strategic monetary policy coordination must monitor the five giants’ microeconomic environments because shocks from them may amplify or even nullify monetary policy measures.

Suggested Citation

  • Adriano Maia & Guilherme De Oliveira & Raul Matsushita & Sergio Da Silva, 2023. "Granular banks and corporate investment," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(3), pages 586-599, September.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:3:d:10.1007_s12197-023-09641-y
    DOI: 10.1007/s12197-023-09641-y
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    More about this item

    Keywords

    Granularity; Granular residual; Banks; Corporate investment; Aggregate investment.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

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