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Latin American Economy & Business - September 2013 (ISSN 1741-7430)

Brazil’s BNDES: Propping the economy, picking winners, and distorting markets

Relative to its peers in other countries, Brazil's Banco Nacional de Desenvolvimento Econômico e Social (BNDES) stands out because of its relative size as a conduit for credit to business. It also stands out because of the diversity of its activities. Like the other two main state owned banks - Banco do Brasil (BB) and Caixa Econômico Federal (CEF) - BNDES has expanded its loan book aggressively over the past few years, and has probably stopped Brazil's economic slowdown from becoming something worse. However, BNDES' ability to secure funding at negative real rates of interest and lending to (mainly) large enterprises at highly concessional rates produces substantial distortions.

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