Abstract:

Credit markets in emerging economies display imperfections that are not found in more developed countries. In particular, developing countries exhibit credit asymmetries between non-tradable and tradable sectors. Firms operating in tradable sectors have more credit access than firms operating in non-tradable sectors because the former can access foreign credit markets in addition to using their exports as collaterals in the domestic credit market. This dissertation will document the existence of credit constraints and credit asymmetries in Brazilian credit markets between 1986 and 2006. This will be done through the estimation of a sales accelerator model of investment, using balance sheet data at firm level and industry level. Groups of Brazilian firms are shown to be credit constrained between 1986 and 2006. Credit constraints were reduced after financial liberalization, in 1992. Credit asymmetries are also identified between publicly traded firms and non-publicly traded firms, between small and large firms, and across sectors of activity. Small non-publicly traded firms operating in agriculture, services and industrial sectors with weak exporting performance were more credit constrained than other firms especially before financial liberalization.