Brazilian Retail Banking and the 2008 Financial Crisis: Were the Government-Controlled Banks that Important?

20 Pages Posted: 6 Sep 2012 Last revised: 25 Sep 2012

See all articles by Claudiney Pereira

Claudiney Pereira

Tulane University - Department of Economics

Luiz Maia-Filho

Universidade Federal Rural de Pernambuco (UFRPE)

Date Written: March 2, 2012

Abstract

We revisit the interest rate pass-through effect using weekly retail banking data from May 2006 to March 2010. Our choice of data avoids caveats of previous studies concerning excessive data aggregation and the estimation of how fast changes in benchmark interest rates impact those charged on short-term loans in Brazil. Our analysis focuses on four large retail banks – two of them privately owned and run, two of them government-controlled – before and after September 2008. They account for 60% of the total credit supplied by retail banks. Results indicate that government control over two of the largest banks, supposedly an asset for crisis management, may have had higher welfare costs than assumed. We find no evidence of asymmetry in adjustments of retail rates charged by private and government-controlled banks.

Keywords: Monetary policy, Retail banking, Interest rate pass-through, Government-controlled banks, Financial crisis

JEL Classification: E43, E52, E60

Suggested Citation

Pereira, Claudiney and Maia-Filho, Luiz, Brazilian Retail Banking and the 2008 Financial Crisis: Were the Government-Controlled Banks that Important? (March 2, 2012). Available at SSRN: https://ssrn.com/abstract=2141980 or http://dx.doi.org/10.2139/ssrn.2141980

Claudiney Pereira (Contact Author)

Tulane University - Department of Economics ( email )

New Orleans, LA 70118
United States

Luiz Maia-Filho

Universidade Federal Rural de Pernambuco (UFRPE) ( email )

R. Dom Manoel de Medeiros, s/n, Dois Irmãos
Recife, PE, 52171
Brazil

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