Do Brazilian Banks Compete?

22 Pages Posted: 29 Jan 2006

See all articles by Agnes Belaisch

Agnes Belaisch

International Monetary Fund-Paris Office

Date Written: May 2003

Abstract

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.

Keywords: Financial Intermediation, Interest rates, Market structure, Competition, Brazil

JEL Classification: G21, D43

Suggested Citation

Belaisch, Agnes, Do Brazilian Banks Compete? (May 2003). IMF Working Paper No. 03/113, Available at SSRN: https://ssrn.com/abstract=879189

Agnes Belaisch (Contact Author)

International Monetary Fund-Paris Office ( email )

700 19th Street NW
Washington, DC 20431
United States

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