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Access to Loans and Local Development: Evidence from Brazilian Municipalities

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  • Motta Café, Renata

Abstract

Limited access to credit has been identified as a major constraint to sustainable municipal development, but empirical evidence on the effectiveness of credit operations remains inconclusive. This paper evaluates the impact of federal government guaranteed loans on public expenditures. Using data from Brazilian municipalities and a regression discontinuity design that leverages a discontinuity in the eligibility criteria for federal government guarantees, I show that the loans have a positive impact on the quality of local expenditure and social outcome indicators. This impact is characterized by a significant increase in investment while keeping personnel expenditures stable.

Suggested Citation

  • Motta Café, Renata, 2024. "Access to Loans and Local Development: Evidence from Brazilian Municipalities," IDB Publications (Working Papers) 13819, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:13819
    DOI: http://dx.doi.org/10.18235/0013241
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    More about this item

    Keywords

    State capacity; Access to credit; public expenditure; municipal development;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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