DC Accepted Papers Paper:
Constrained or Not Constrained? Identifying Financially Constrained Firms in the Brazilian Economy
*Names in bold indicate Presenter
If a policy is not able to target credit-constrained companies with more accuracy than the available lending technologies used by the financial sector, a pareto improvement would be achieved only by chance. That is why the main objective of this research is to test the adequacy of traditional credit constraint measures to the Brazilian reality by evaluating their capacity to explain the firms investment and export dynamics. Though quite popular in the academic literature, none of them have been tested in the context of developing economies – precisely where this market failure should be more pervasive. In particular, this work will evaluate how companies identified as creditconstrained, as compared to unconstrained ones, react after accessing subsidized loans from the Brazilian Development Bank (BNDES). According to the economic theory, impact of these loans (that might be understood as a treatment) on investment and export levels should be higher among the first group.