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Relaxing credit constraints in emerging economies: The impact of public loans on the performance of Brazilian manufacturers

Author

Listed:
  • Ottaviano, Gianmarco I. P.
  • Lage de Sousa, Filipe

Abstract

Especially in developing countries credit constraints are often perceived as one of the most important market frictions constraining firm innovation and growth. Huge amounts of public money are being devoted to the removal of such constraints but their effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analysing the effects of the Brazilian Development Bank (BNDES) loans. It finds that, before receiving BNDES support, granted firms are indeed more credit constrained than comparable non-granted firms. It also finds that BNDES support allows granted firms to achieve the same level of performance as similar non-granted firms that are not credit constrained. However, it does not allow granted firms to outperform similar non-granted ones.

Suggested Citation

  • Ottaviano, Gianmarco I. P. & Lage de Sousa, Filipe, 2014. "Relaxing credit constraints in emerging economies: The impact of public loans on the performance of Brazilian manufacturers," CFS Working Paper Series 469, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:469
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    References listed on IDEAS

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    More about this item

    Keywords

    heterogeneous firms; productivity; public policy analysis; credit constraints;

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H00 - Public Economics - - General - - - General

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