Brief Comments on: “Financing Development: The Case of BNDES” by Ferraz, Leal, Marques, and...
-
Upload
frederica-gardner -
Category
Documents
-
view
213 -
download
0
Transcript of Brief Comments on: “Financing Development: The Case of BNDES” by Ferraz, Leal, Marques, and...
Brief Comments on: “Financing Development: The Case of BNDES”
by Ferraz, Leal, Marques, and Miterhof
IEA- WB Roundtable-New Thinking on Industrial Policy
May 22, 2012
Growth in Real Lending: Latin American Banks
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2005 2006 2007 2008 2009
An
nu
al %
gro
wth
ra
te
Foreign
Domestic private
Government
Growth in Real Lending: Eastern European Banks
-10
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009
Ann
ual %
gro
wth
rat
e
Foreign
Domestic private
Government
Where did lending go? ∆Li,t,j = Foreigni,t,j + Governmenti,t,j + Crisis_2008i,t,j + Crisis_2009i,t,j
+Crisis_2008i,t,jForeigni,t,j + Crisis_2008i,t,jGovernmenti,t,j + Crisis_2009i,t,jForeigni,t,j + Crisis_2009i,t,jGovernmenti,t,j + Xi,t-1,j + j + ui,t,j
• “Government-owned banks in Latin America stepped up their lending, relative to other banks and to their own pre-crisis lending pace, to corporations and consumers during the crisis.”
• “This did not occur in Eastern Europe, where government-owned banks behaved no differently than domestic private banks.”
(Cull and Martinez Peria, 2012)
Why the differences between Latin America and Eastern Europe?
Speculation• Larger, more state-owned banks in Latin
America• Profitability Loan growth• Smaller government deficits
BNDES not typical?
All Brazilians Spared from Crisis?Likelihood that HH has formal loan, relative to 2003 baseline survey,
Source: Cull, Leite, Scott (2011).
Quarter 3, 2008 Quarter 4, 2008 Quarter 1, 2009 Quarter 2, 2009
-0.3
-0.25
-0.2
-0.15
-0.1
-0.05
0
0.05
0.1
UrbanRural
Branch Expansion in Rural IndiaBurgess and Pande (2005), AER
• 1:4 licensing policy, 1977-1990• Rural branch expansion explains 14-17 percentage point
decline in poverty headcount
“Whether state monies invested in the banking sector would have generated greater poverty reduction if spent elsewhere is not a question we can address….The fact that bank loan default rates were in the range of 40 percent during the 1980s, leading to the demise of the rural branch expansion program, should make us sanguine about the advisability of such a program without careful consideration of both costs and benefits.”
Brazilian Case
“As a financial institution wholly-controlled by the federal government and with stable sources of funding to carry out its mission, the BNDES, throughout its history, has managed to rise to the challenges in fostering economic and social development in the country.” (p. 5)
• At what cost?• Counter-factual?• Hypothesis testing• Benchmarking to other state-owned banks