This article analyzes the conservative behavior of public financial institutions' treasuries, which incur a trade-off for prioritizing their development-related activities instead of their funds management. Using the capital asset pricing model (CAPM), evidence from the Northeast Bank of Brazil, the largest regional development bank in Latin America, suggests that changes in the institutions, as well as in the legislation that restricts their investment policy, are feasible.
capital asset pricing model; public financial institutions' treasuries; institutional changes
