Credit, liquidity preference and regional development: the role of private and public banks in the Brazilian financial system (2001–06)

Abstract

Abstract This work aims at analyzing the form that public and private banks act, focusing on their capacity to motivate credit and push regional development. We studied the data from the balance sheets of 21 banks acting in Brazil, which were divided among private national banks, private international banks, public federal banks, and public state banks. Empirical tests have shown that banks’ liquidity preference has influence over the total amount of credit, and that public federal banks are responsible for the highest impact. A srong financial concentration in the country was verified, being public federal and private national banks the ones that provide most of the credit. It is highlighted also the need for raising private banks’ credit in the least developed regions. Verifying the influence of public federal banks’ liquidity preference over other banks’ credit it was shown their potential in leading the development process and pushing other banks’ credit. Key-words: Credit, liquidity preference, financial system. Classificação JEL: G21, L16, R11 Artigo recebido em mar. 2011 e aceito para publicação em out. 2012.