State Bank Transformation in Brazil - Choices and Consequences

45 Pages Posted: 13 Jul 2005

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Juan Miguel Crivelli

World Bank

William Summerhill

University of California, Los Angeles - Department of History

Date Written: June 2005

Abstract

This paper analyzes the different options - liquidation, federalization, privatization and restructuring - that the Brazilian state government had for the transformation of state banks under the Programa de Incentivo a Reducao do Setor Publico Estadual na Atividade Bancaria (PROES) in the late 1990s. Specifically, the paper explores (i) the factors behind the states' choices and (ii) the effects of the transformation process on bank performance and efficiency. We find that states that were more dependent on federal transfers, whose banks were already under federal intervention and that established development agencies were more likely to relinquish control over their banks and transformation processes. We find that privatized banks improved their performance, while restructured banks did not.

Keywords: Bank privatization, Brazil, bank performance

JEL Classification: G21, G28, H77

Suggested Citation

Beck, Thorsten and Crivelli, Juan Miguel and Summerhill, William, State Bank Transformation in Brazil - Choices and Consequences (June 2005). Available at SSRN: https://ssrn.com/abstract=755004

Thorsten Beck (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Juan Miguel Crivelli

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

William Summerhill

University of California, Los Angeles - Department of History

Box 951473
Los Angeles, CA 90095-1473
United States
310-206-7600 (Phone)

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