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Journal of Economics and Finance

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22-07-2023

Granular banks and corporate investment

Authors: Adriano Maia, Guilherme De Oliveira, Raul Matsushita, Sergio Da Silva

Published in: Journal of Economics and Finance | Issue 3/2023

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Abstract

We examine the explanatory power of the granular residual of the five main Brazilian banks from 2010 to 2019 on corporate investment. Approximately two-thirds of the total investment rate is attributable to idiosyncratic shocks to the overall operating revenues of these banks, according to our results. Because the Brazilian banking industry is more concentrated, this proportion is higher than that discovered in a study for Japan. In addition, the explanatory power rises when typical monetary and fiscal macroeconomic shocks are added, and the number of microeconomic shocks associated with the banking granular residual exceeds the number of fiscal shocks and monetary shocks. A policy implication is that strategic monetary policy coordination must monitor the five giants’ microeconomic environments because shocks from them may amplify or even nullify monetary policy measures.

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Title: Granular banks and corporate investment
Authors: Adriano Maia
Guilherme De Oliveira
Raul Matsushita
Sergio Da Silva
Publication date: 22-07-2023
Publisher: Springer US
Published in: Journal of Economics and Finance / Issue 3/2023
Print ISSN: 1055-0925
Electronic ISSN: 1938-9744
DOI: https://doi.org/10.1007/s12197-023-09641-y

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