Are defaults a family affair?: the relationship between kinship and microloan performance

A partir de uma grande base de dados fornecida por uma instituição de microcrédito do nordeste brasileiro, a relação entre parentesco e inadimplência é analisada. O presente trabalho mostra evidências de que o parentesco entre membros de um grupo solidário afeta positivamente a adimplência. Grupos em que todos os membros possuíam algum laço de parentesco entre si apresentaram uma probabilidade 24% menor de inadimplência do que grupo sem esses laços. Além disso, quando considerado apenas o primeiro empréstimo, grupos com 100% de parentesco entre os membros apresentaram uma probabilidade 45% menor de inadimplência em comparação com membros sem relações de parentesco. Os resultados deste trabalho também mostram que há uma relação negativa entre parentesco e probabilidade de mudança na formação de um grupo solidário. Essas análises permitem fazer inferências acerca dos mecanismos pelos quais o parentesco afeta o desempenho do microcrédito. Os resultados sugerem que o parentesco possui um benefício maior no processo de autosseleção do grupo. Além disso, os resultados também sugerem que o impacto positivo do parentesco nas atividades de automonitoramento compensa o enfraquecimento das atividades de enforcement.

The effects of credit risk transfer on bank monitoring and firm financing

This paper examines the efects of the transfer of credit risk associated with bank loans. We are interested in (a) whether the transfer of credit risk has any impact on the intensity with which banks monitor their borrowers and (b) whether credit risk transfer infuences the amount of financing that is provided to firms in an economy. Our model first develops conditions under which bank finance is available to firrms, mainly in the spirit of Holmstrom/Tirole (1997). We then introduce projects with uncorrelated pay-offs and argue that one possible economic rationale for credit risk transfer is diversi¯cation. We analyze whether and how within this scenario the transfer of the credit risk of loans changes a bank's incentives to monitor its debtors. Finally we investigate whether and what kind of impact this may have on the amount of ¯nancing available to firms in an economy. Our results indicate that the monitoring incentives are being eroded indeed and that credit risk transfer can increase the overall amount of obtainable funds in an economy.

Cyclicality of SME Lending and Government Involvement in Banks

Recent regulatory efforts aim at lowering the cyclicality of bank lending because of its potential detrimental effects on financial stability and the real economy. We investigate the cyclicality of SME lending by local banks with vs. without a public mandate, controlling for location, size, loan maturity, funding structure, liquidity, profitability, and credit demand-side factors. The public mandate is set by local governments and stipulates a deviation from strict profit maximization and a sustainable provision of financial services to local customers. We find that banks with a public mandate are 25 percent less cyclical than other local banks. The result is credit supply-side driven and especially strong for savings banks with high liquidity and stable deposit funding. Our findings have implications for the banking structure, financial stability and the finance-growth nexus in a local context.

The importance of firms' strategic resources and capabilities in crisis situations

The general idea of this research is to analyze overall firm performance before and after the global financial crisis of 2008. The main question is: What kind of strategies did companies adopt that led to positive business performance after the crisis? Are there any particular competitive advantages that bring better performance in the case of an economic downturn? This research focuses on competitive advantage gained by resource-based view attributes of a product (quality, durability and prestige) and dynamic capabilities (strategic flexibility in product development and technological innovation ability). The economic crisis setting provides a proper background to analyze the competitive advantage strategies in a dynamic, low-probability environment to determine which are most worth adopting in the business world. I employ an OLS regression analysis in order to measure the business performance of 136 Brazilian firms across four years – 2002, 2005, 2008 and 2012. The findings indicate that even though all of the strategic resources and capabilities positively influence firm performance in expansionary periods, only the superior product characteristics are pertinent in surviving an economic downturn.

Cyclicality of SME lending and government involvement in banks

Recent regulatory efforts aim at lowering the cyclicality of bank lending because of its potential detrimental effects on financial stability and the real economy. We investigate the cyclicality of SME lending by local banks with vs. without a public mandate, controlling for location, size, loan maturity, funding structure, liquidity, profitability, and credit demand-side factors. The public mandate is set by local governments and stipulates a deviation from strict profit maximization and a sustainable provision of financial services to local customers. We find that banks with a public mandate are 25 percent less cyclical than other local banks. The result is credit supply-side driven and especially strong for savings banks with high liquidity and stable deposit funding. Our findings have implications for the banking structure, financial stability and the finance-growth nexus in a local context.