Political Connections and Access to Brazilian Development Bank’s Loans - Working Paper Nº 2019-13

Sep 8, 2026

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Prior studies suggest politically connected firms obtain access to subsidized loans from Brazil’s Development Bank (BNDES) by financing candidates for federal deputies during election campaigns. Using donations from the 100 largest Brazilian business groups in the 2006 House of Representatives election as a proxy for political connections, the research documents a positive correlation between donations and the volume borrowed. However, regression discontinuity analysis finds no evidence that deputies elected by narrow vote margins systematically influenced BNDES credit allocation decisions, suggesting other political channels beyond direct donations to winning deputies.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages35

Reading Time1 h 28 min

AccessFree to download

Introduction

Political channels and research gap

Context of BNDES subsidized lending

Related literature and contribution

Empirical strategy (RDD)

Findings and interpretation

Department of Economics-FEA/USP Political Connections and Access to Brazilian Development Bank’s Loans ANDRÉ MEDEIROS SZTUTMAN DANTE MENDES ALDRIGHI WORKING PAPER SERIES Nº 2019-13 DEPARTMENT OF ECONOMICS, FEA-USP WORKING PAPER Nº 2019-13 Political Connections and Access to Brazilian Development Bank’s Loans André Medeiros Sztutman Dante Mendes Aldrighi ([aldrighi@usp.br](aldrighi@usp.br)) Abstract: Prior studies suggest that politically connected firms manage to buy the access to subsidized loans from the Brazilian Development Bank (BNDES) by financing candidates to federal deputies in election campaigns. Nonetheless, and although firms that most donated to these candidates were indeed the same that subsequently most tapped BNDES’ subsidized credit, no anecdotal piece of information has been reported referring to deputies being accused of interfering in BNDES lending policy to benefit their donors. Proxying political connections by the 100 largest Brazilian business groups’ donations to candidates in the 2006 election for the House of Representatives, we also documented a positive correlation between these groups’ donations and the amount they borrowed from the bank. However, carrying out regression discontinuity analysis, we found no evidence that federal deputies elected by a small margin of votes had systematically affected BNDES credit allocation decisions. The discrepant empirical results may indicate the influence on the access to the bank’s loans through political connections other than direct donations to winning federal deputies. Keywords: Election campaign donations; development banks; subsidized credit; regression discontinuity design.. JEL Codes: D72;G38; H81 . Political Connections and Access to Brazilian Development Bank’s Loans André Medeiros Sztutman and Dante Mendes Aldrighi* Abstract Prior studies suggest that politically connected firms manage to buy the access to subsidized loans from the Brazilian Development Bank (BNDES) by financing candidates to federal deputies in election campaigns. Nonetheless, and although firms that most donated to these candidates were indeed the same that subsequently most tapped BNDES’ subsidized credit, no anecdotal piece of information has been reported referring to deputies being accused of interfering in BNDES lending policy to benefit their donors. Proxying political connections by the 100 largest Brazilian business groups ’ donations to candidates in the 2006 election for the House of Representatives, we also documented a positive correlation between these groups’ donations and the amount they borrowed from the bank. However, carrying out regression discontinuity analysis, we found no evidence that federal deputies elected by a small margin of votes had systematically affected BNDES credit allocation decisions. The discrepant empirical results may indicate the influence on the access to the bank’s loans through political connections other than direct donations to winning federal deputies. Keywords: Election campaign donations, development banks, subsidized credit, regression discontinuity design. JEL Code: D72, G38, H81 * Sztutman (Massachusetts Institute of Technology, Ph.D. candidate) gratefully acknowledges the financial support from FAPESP. Aldrighi (Universidade de São Paulo) thanks to grant from the Brazil’s National Research Council (CNPq) . 1. Introduction Despite the copious literature on the influence of political connections on government-owned banks’ decisions, the specific political channels by which politicians favor firms have much to be clarified. We attempt herein to reduce this gap by focusing on the relationship between corporate donations to candidates to federal deputies and access to subsidized lending from the Brazilian Development Bank (BNDES) . In 2010 BNDES handled a budget of more than US$ 100 billion and accounted for 21% of the overall domestic credit supply. BNDES policy of below-market lending

FAQs

How do politically connected firms obtain BNDES subsidized loans in prior research?

Prior studies argue that firms finance candidates for federal deputies in election campaigns, then benefit from subsidized credit access from BNDES.

What measure of political connections does this working paper use?

It proxies political connections through donations by the 100 largest Brazilian business groups to candidates in the 2006 House of Representatives election.

What does the regression discontinuity design show about the role of winning deputies?

RDD results find no evidence that federal deputies elected by a small margin systematically affected BNDES credit allocation decisions.

Sep 8, 2026

Upload by Fahsai