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Measuring Financial Restrictions of Brazilian Private Firms with Microdata: a Contract Theory Approach

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  • Fernando Nascimento de Oliveira

Abstract

This study develops original measures of financial constraints for a sample of 6,215 private firms in Brazil spanning the period from 2012 to 2022. To construct these metrics, I utilize a granular dataset comprising 11,967,603 loan contracts between these firms and financial institutions. Following theoretical framework of Bester (1985), my identification strategy is based on relative interest rates and collateral requirements within the credit agreements. Using these constraints, I estimate firms' investment demand and provide empirical evidence that financial frictions exert a statistically significant negative effect on capital expenditure.

Suggested Citation

  • Fernando Nascimento de Oliveira, 2026. "Measuring Financial Restrictions of Brazilian Private Firms with Microdata: a Contract Theory Approach," Working Papers Series 655, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:655
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    File URL: https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/WP655.pdf
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