Summary and Concluding Remarks: Towards a New Financial Reform in Brazil

The objective of this study has been to provide a systematic analysis of the post-war Brazilian experience with financial and capital market development. The introduction motivates the study and outlines a macroeconomic chronology which serves as a backdrop throughout. Chapter 1 reviews a number of different theories concerning the importance of financial development and different policy prescriptions to attain this goal. Chapter 2 looks at the pre-reform financial system during the heyday of import substitution industrialisation (ISI) from 1945 to 1964. The same chapter argues that the lack of functioning financial and capital markets contributed to the exhaustion of ISI policies. It also pinpoints the areas where market and institutional failures led to serious problems in the intermediation process. Chapter 3 analyses the original objectives to the reformers in 1964–7, the structure of financial markets which resulted from the reforms, and the structure of the decision process of financial policy. The remaining chapters of the study investigate the longer-term ramifications of the reforms. Chapter 4 shows that the objectives of creating vigorous markets for equities took much longer than expected and had limited success. Chapter 5 analyses the implications of creating inflation-indexed debt instruments. Finally, Chapter 6 examines the changing balance sheet structure of Brazilian firms and financial institutions in addition to gauging the efficiency of the intermediation process in Brazil.