Banks, Domestic Debt Intermediation and Confidence Crises: The Recent Brazilian Experience

23 Pages Posted: 3 Aug 2000

See all articles by Afonso S. Bevilaqua

Afonso S. Bevilaqua

Catholic University of Rio de Janeiro (PUC-Rio)

Marcio G. P. Garcia

Pontifical Catholic University - Department of Economics

Date Written: November 1999

Abstract

This paper examines the recent evolution of the Brazilian public domestic debt and interprets it in light of the confidence crisis literature. The analysis of the recent developments in the Brazilian public domestic debt market shows that the likelihood of a default must not be assessed only using simple summary aggregate measures of public domestic debt size and maturity, but must also take into consideration other structural aspects. Our analysis emphasizes the two main pillars of the Brazilian public domestic debt market: home-bias and the role of the banking sector in intermediating the debt. Evidence from yields of a "perfectly" indexed bond shows that the rollover premium was very small when the devaluation occurred, and is still fairly small by October, 1999, indicating that the rollover of the public domestic debt has not, so far, constituted a serious problem. Positive prospects for the public domestic debt market will depend, however, on the Brazilian government maintaining the current fiscal austerity program.

JEL Classification: E65, H63

Suggested Citation

Bevilaqua, Afonso S. and Garcia, Marcio G. P., Banks, Domestic Debt Intermediation and Confidence Crises: The Recent Brazilian Experience (November 1999). Available at SSRN: https://ssrn.com/abstract=228783 or http://dx.doi.org/10.2139/ssrn.228783

Afonso S. Bevilaqua (Contact Author)

Catholic University of Rio de Janeiro (PUC-Rio) ( email )

Rua Marquas de Sao Vicente, 225
RJ 22453-900 Rio de Janeiro, 22453-900
Brazil

Marcio G. P. Garcia

Pontifical Catholic University - Department of Economics ( email )

Rua Marques de Sao Vicente, 225/206F
Rio de Janeiro, RJ 22453
Brazil
(5521) 274 2797 or 294 5490 (Phone)
(5521) 294 2095 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
128
rank
218,074
Abstract Views
1,194
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information