Template-Type: ReDIF-Paper 1.0
Author-Name: Gabriel Garber
Author-X-Name-First: Gabriel
Author-X-Name-Last: Garber
Author-Name: Atif Mian
Author-X-Name-First: Atif
Author-X-Name-Last: Mian
Author-Name: Jacopo Ponticelli
Author-X-Name-First: Jacopo
Author-X-Name-Last: Ponticelli
Author-Name: Amir Sufi
Author-X-Name-First: Amir
Author-X-Name-Last: Sufi
Title: Government Banks, Household Debt, and Economic Downturns: The Case of Brazil
Abstract: After the global financial crisis, government banks in Brazil boosted credit provision to households, generating a sharp increase in household debt which was followed by the most severe recession in recent Brazilian history in 2015-2016. Using a novel individual-level data set including matched credit registry and employer-employee information, we show that individuals with higher debt-to-income growth during the boom experienced lower subsequent credit card expenditure during the recession. To identify the credit-supply effect, we exploit individuals borrowing from both government-controlled and private banks. We show that, during the late stages of the boom period, government banks increased their lending more than private banks to the same individual. To study the effect of this credit supply shock on individual consumption, we exploit variation in the sector of employment of each borrower. Individuals employed by the public sector were disproportionately targeted by payroll loans offered by government banks and experienced larger decline in credit card spending during the subsequent recession.
Length: 44 pages
Creation-Date: 2020-08
File-URL: https://www.bis.org/publ/work876.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work876.htm
File-Format: text/html
Number: 876
Classification-JEL: D14, E21, G21, G28
Keywords: credit booms, household credit, payroll loans, credit card expenditure
Handle: RePEc:bis:biswps:876