Do Brazilian Banks Compete?

Author/Editor:

Agnes A Belaisch

Publication Date:

June 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

More developed financial systems are associated with higher investment and better economic performance. This paper discusses possible factors that may inhibit a deepening of bank intermediation and more efficient banking in Brazil, two aspects that are found to be significantly different than in leading banking systems in other parts of the world. Using panel data, it finds positive evidence of the presence of a noncompetitive market structure in the Brazilian banking system, a factor that could explain why intermediation may be relatively low and costly. When banks behave like local monopolies or oligopolies, incentives to improve efficiency are weak and the interest rate spread is large, discouraging higher lending volumes.

Series:

Working Paper No. 2003/113

Subject:

Banking Commercial banks Competition Financial institutions Financial markets Foreign banks Loans State-owned banks

English

Publication Date:

June 1, 2003

ISBN/ISSN:

9781451853728/1018-5941

Stock No:

WPIEA1132003

Pages:

22

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