This article examines the origins and evolution of long-term financing in Brazil. The need for government intervention in the form of a development bank is explained. Particularities of the Brazilian experience with its state-owned National Development Bank (BNDES) are described and analyzed. The final section tackles the challenges and limitations of the Brazilian system of long-term financing following the global credit crunch of 2008, when BNDES disbursements boomed because of major but unsustainable changes in its capital structure. The article concludes that the system for development finance in Brazil needs to be reformed in order to increase its efficiency and contribute to macroeconomic stability.

Keywords: development banks; long-term finance; BNDES; Brazil

Download Link: http://ilas.columbia.edu/wp-content/uploads/2016/03/Columbia-LCBS_Working-Papers_Volume-One.pdf?7988ad

About the Authors

Luiz Pinto
Post-Doctoral Visiting Scholar
School of International and Public Affairs
Columbia University in New York

Marcos Reis
PhD in Economics
Institute of Economics
Federal University of Rio de Janeiro

Marcos Reis is the IPD Young Scholar for the 2015 Latin America-China workshop in Beijing, China. He is also a PhD in Economics, Institute of Economics, Federal University of Rio de Janeiro (IE-UFRJ), Brazil