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Banking Concentration, Interest Rates, and Growth in Brazil

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  • Alexis Cavichini

    (Universidade Federal do Rio de Janeiro)

Abstract

Between 1995 and 2014 Brazil?s financial system total asset increased from US$ 650 billion, to US$ 3.1 trillion. A growth of 377%. In the same period, the five largest banks bounced from an average loss of US$ 1 billion in 1995 to an average profit of US$ 25.5 billion in 2014. High interest, for enterprises and individuals, have been a major obstacle to the growth of the country. In the last twenty years, average GDP growth in Brazil was 2.6% p.a. This result is meaningfully lower than other developing nations. The objective of this paper is to understand this contradiction between Brazil?s financial system and other segments of the economy, and find answers, opportunities, possibilities, and solutions, which allow Banks to operate at a lower cost, leveraging the economic development of the country.

Suggested Citation

  • Alexis Cavichini, 2015. "Banking Concentration, Interest Rates, and Growth in Brazil," Proceedings of International Academic Conferences 1003929, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:1003929
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    References listed on IDEAS

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    1. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    2. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," The World Bank Economic Review, World Bank, vol. 13(2), pages 379-408, May.
    3. Altunbas, Y. & Gardener, E. P. M. & Molyneux, P. & Moore, B., 2001. "Efficiency in European banking," European Economic Review, Elsevier, vol. 45(10), pages 1931-1955, December.
    4. Allen, Franklin & Santomero, Anthony M., 1997. "The theory of financial intermediation," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1461-1485, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    banking concentration; interest rates; brazil; growth; GDP;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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