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Investment of Firms in Brazil: do financial restrictions, unexpected monetary shocks and BNDES play important roles?

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  • Fernando N. de Oliveira

Abstract

Our objective in this paper is to estimate the dynamics of firm investment in Brazil. For this purpose, we built an original database with confidential and public data containing balance sheet and financial information of 5,026 public and private firms from the third quarter of 1994 to the fourth quarter of 2010. We then classify these firms as financially restricted or not, according to several classification schemes found in the literature. Our results show that unexpected monetary policy, financial restrictions and Brazil´s development bank, BNDES, financing policies are very important to explain the dynamics of investment in Brazil. Our results are robust to several model specifications, econometric techniques and classifications schemes of financially and non-financially restricted firms.

Suggested Citation

  • Fernando N. de Oliveira, 2014. "Investment of Firms in Brazil: do financial restrictions, unexpected monetary shocks and BNDES play important roles?," Working Papers Series 366, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:366
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    Cited by:

    1. Fatma Bouattour, 2016. "Financial Constraints and Export Performances: Evidence from Brazilian Micro-Data," Working Papers DT/2016/18, DIAL (Développement, Institutions et Mondialisation).
    2. Torres, Ernani & Zeidan, Rodrigo, 2016. "The life-cycle of national development banks: The experience of Brazil's BNDES," The Quarterly Review of Economics and Finance, Elsevier, vol. 62(C), pages 97-104.
    3. Fatma Bouattour, 2020. "Measuring financial constraints of Brazilian industries: Rajan and Zingales index revisited," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(6), pages 677-710, August.
    4. Ferraz, João Carlos & Coutinho, Luciano, 2019. "Investment policies, development finance and economic transformation: Lessons from BNDES," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 86-102.
    5. de Menezes Barboza, Ricardo & Vasconcelos, Gabriel F.R., 2019. "Measuring the aggregate effects of the Brazilian Development Bank on investment," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 223-236.

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