The Effects of Regulatory Information Systems on Credit Allocation : Evidence from Brazil’s Rural Credit Bureau

This paper studies how improvements in regulatory information systems affect credit allocation in rural financial markets. In 2021, the Central Bank of Brazil introduced major enhancements to the Rural Credit Bureau, first by integrating geospatial data on borrowers’ plots with national environmental and social compliance registries, and then by automating real-time verification of credit applications. These reforms simultaneously increased the information available to financial institutions and established a centralized second line of defense that blocks non-compliant credit operations. Using municipality-level data, the analysis finds that after the improvement in regulatory information, credit growth slowed in areas with larger shares of protected land, particularly among cooperatives and public banks. The effect is consistent across regions and biomes, indicating the operation of a uniform national enforcement mechanism. The paper rules out confounding policy changes and shows that the results are not driven by shifts in credit demand or bank risk exposure. The findings suggest that combining improved data integration with real-time monitoring can strengthen environmental enforcement by redirecting financial flows away from high-risk areas without broadly constraining access to rural credit.