Regional inequality in the supply of bank credit to firms: a panel data analysis of the period 2000-2011

Abstract

The aim of the paper is to present an empirical study about the regional behavior of the bank credit to firms in the 2000-2011 period using a panel data model. The variables used in the model were obtained from two statistical data banks currently disseminated by the Brazilian Central Bank. Based on post-Keynesian literature, the regional results of the econometric model confirmed, what we call, the existence of a financial paradox of social efficiency. This paradox means that the higher liquidity preference observed in the less developed regions, implies that potential and actual productive resources are idle, and so the social functionality of the bank is not fulfilled in the region. This behavior calls for public policies to reduce the financial gap and promote economic growth in less developed regions.

Keywords:
Banks; Regional inequality; Liquidity preference; Regional credit; Panel data