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Banking in Brazil: Structure, Performance, Drivers, and Policy Implications

Author

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  • Urdapilleta, Eduardo

    (The World Bank)

  • Stephanou, Constantinos

    (The World Bank)

Abstract

he objective of this paper is to analyze the industry structure of banking services in Brazil in order to shed light on financial performance and its drivers at a disaggregated level. The study illustrates how differences across market segments -- which tend to be averaged out in aggregate analysis -- need to be taken into account when analyzing performance and designing public policy for the banking sector. In particular, retail banking is found to be less sensitive to price competition and to exhibit considerably higher returns than corporate banking. The authors identify and discuss the factors underlying revenues, costs, and risks in each market segment, and conclude with policy implications.

Suggested Citation

  • Urdapilleta, Eduardo & Stephanou, Constantinos, 2009. "Banking in Brazil: Structure, Performance, Drivers, and Policy Implications," Policy Research Working Paper Series 4809, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4809
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    References listed on IDEAS

    as
    1. Timothy Clark & Astrid A. Dick & Beverly Hirtle & Kevin J. Stiroh & Robard Williams, 2007. "The role of retail banking in the U.S. banking industry: risk, return, and industry structure," Economic Policy Review, Federal Reserve Bank of New York, vol. 13(Dec), pages 39-56.
    2. Hirtle, Beverly J. & Stiroh, Kevin J., 2007. "The return to retail and the performance of US banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1101-1133, April.
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    4. Claessens, Stijn & Laeven, Luc, 2004. "What Drives Bank Competition? Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 563-583, June.
    5. Márcio I. Nakane & Leonardo S. Alencar & Fabio Kanczuk, 2006. "Demand for Bank Services and Market Power in Brazilian Banking," Working Papers Series 107, Central Bank of Brazil, Research Department.
    6. World Bank, 2005. "Lithuania : Investment Climate Assessment," World Bank Publications - Reports 8568, The World Bank Group.
    7. Ms. Agnes A Belaisch, 2003. "Do Brazilian Banks Compete?," IMF Working Papers 2003/113, International Monetary Fund.
    8. Nicola Cetorelli, 2001. "Does bank concentration lead to concentration in industrial sectors?," Working Paper Series WP-01-01, Federal Reserve Bank of Chicago.
    9. World Bank, 2005. "Ecuador : Investment Climate Assessment," World Bank Publications - Reports 8571, The World Bank Group.
    10. World Bank, 2006. "Brazil : Interest Rates and Intermediation Spreads," World Bank Publications - Reports 21461, The World Bank Group.
    11. Márcio I. Nakane, 2001. "A Test of Competition in Brazilian Banking," Working Papers Series 12, Central Bank of Brazil, Research Department.
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    Cited by:

    1. Paulo L. dos Santos, 2013. "A cause for policy concern: the expansion of household credit in middle-income economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(3), pages 316-338, May.
    2. Cihak, Martin & Demirguc-Kunt, Asli, 2013. "Rethinking the state's role in finance," Policy Research Working Paper Series 6400, The World Bank.

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    Keywords

    Brazil; banking; competition; industry structure; performance;
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