Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
966827 | Journal of Monetary Economics | 2015 | 17 Pages |
Abstract
Although government banks are frequently associated with political capture and resource misallocation, they may be well-positioned during times of crisis to provide counter-cyclical support. Following the collapse of Lehman Brothers in September 2008, Brazil׳s government banks substantially increased lending. Localities in Brazil with a high share of government banks received more loans and experienced better employment outcomes relative to localities with a low share of government banks. While increased government bank lending mitigated an economic downturn, we find that this lending was politically targeted, inefficiently allocated, and reduced productivity growth.
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Authors
Nicholas Coleman, Leo Feler,