Financial Development, Growth and Equity in Brazil
Financial markets help to foster growth and productivity through their role inmobilizing savings to finance investment and production, selecting and monitoringinvestment projects, diversifying risks, and allowing investment and production to becarried out in the most productive scale and time frame. This paper examines the linksbetween financial development, growth and equity. The focus is on the Brazilian case,but we also aim at contributing to a broader discussion on the role of financial marketsin fostering economic development in Latin America. The analysis discusses: a) Brazil?srecent growth record, which resembles Latin America?s average regarding pace andsources of growth; b) recent changes in financial intermediation in the region, stressingthe role of the public sector in absorbing private savings; c) the interface betweengrowth and finance; d) the issue of access to financial services; and e) the impedimentsto financial deepening and inclusion drawn from the Brazilian experience.Among its conclusions we highlight the relatively small contribution the Brazilianfinancial system has had towards promoting growth and equity in the followingsequence: a) the incomplete macroeconomic adjustment of the economy, which lead tohigh interest rates, market volatility, and a preference of savers for liquid, short-termfinancial investments; b) the high tax burden and the associated high degree ofinformality and fiddling with company accounts, which lower the quality of theinformation disclosed to financial institutions and capital markets; c) the central role ofthe state in mobilizing and allocating savings, largely an inheritance of the pre-1990sdevelopment model, which dampens the impact of financial intermediation on capitalproductivity; and d ) the low protection of minority shareholders and especiallycreditors against expropriation by the state and private parties create a highly uncertainand risky environment that raises the cost of capital, discourages financialintermediation and raises the preference for short-term and liquid financial assets.
|Date of creation:||Sep 2005|
|Date of revision:|
|Contact details of provider:|| Postal: SBS - Quadra 01 - Bloco J - Ed. BNDES, Brasília, DF - 70076-90|
Web page: http://www.ipea.gov.br
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Asli Demirguc-Kunt & Luc Laeven & Ross Levine, 2003.
"Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation,"
NBER Working Papers
9890, National Bureau of Economic Research, Inc.
- Asli Demirgüç-Kunt & Luc Laeven & Ross Levine, 2004. "Regulations, market structure, institutions, and the cost of financial intermediation," Proceedings, Federal Reserve Bank of Cleveland, pages 593-626.
- Demirguc-Kunt, Asli & Laeven, Luc & Levine, Ross, 2004. "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 593-622, June.
- Eduardo Lora & Ugo Panizza, 2002.
"Structural Reforms in Latin America under Scrutiny,"
Research Department Publications
4301, Inter-American Development Bank, Research Department.
- Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4303, Inter-American Development Bank, Research Department.
- Ugo Panizza & Eduardo Lora, 2002. "Structural Reforms in Latin America under Scrutiny," IDB Publications (Working Papers) 80318, Inter-American Development Bank.
- Ross Levine & Norman Loayza & Thorsten Beck, 2002.
"Financial Intermediation and Growth: Causality and Causes,"
Central Banking, Analysis, and Economic Policies Book Series,
in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084
Central Bank of Chile.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 2000. "Financial intermediation and growth: Causality and causes," Journal of Monetary Economics, Elsevier, vol. 46(1), pages 31-77, August.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 1999. "Financial intermediation and growth : Causality and causes," Policy Research Working Paper Series 2059, The World Bank.
- Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
- Reint Gropp & John Karl Scholz & Michelle White, 1996.
"Personal Bankruptcy and Credit Supply and Demand,"
NBER Working Papers
5653, National Bureau of Economic Research, Inc.
- Levine, Ross, 1996.
"Financial development and economic growth : views and agenda,"
Policy Research Working Paper Series
1678, The World Bank.
- Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
- Eduardo Lora, 2001.
"Structural Reforms in Latin America: What Has Been Reformed and How to Measure It,"
Research Department Publications
4293, Inter-American Development Bank, Research Department.
- Eduardo Lora, 2001. "Structural reforms in Latin America: What has been reformed and how to measure it?," Research Department Publications 4287, Inter-American Development Bank, Research Department.
- Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 39858, Inter-American Development Bank.
- Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998.
"Law and Finance,"
3451310, Harvard University Department of Economics.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
- Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "Saving in Developing Countries: An Overview," World Bank Economic Review, World Bank Group, vol. 14(3), pages 393-414, September.
When requesting a correction, please mention this item's handle: RePEc:ipe:ipetds:1118. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Schiavinatto)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.