Additionality of countercyclical credit: evaluating the impact of BNDES' PSI on the investment of industrial firms

Abstract

The Programa de Sustentação do Investimento (PSI) of the Brazilian Development Bank (BNDES) was structured by the Brazilian Government at 2009, with the explicit aim of stopping the economy’s aggregate investment plummet observed at the first semester of that year. With an expressive budget, the program has received much attention in recent Brazilian economic debate, with several authors questioning its capacity to burst aggregate investment, since the GFCF has not recovered its pre-crisis level. Using information available at the firm level, this paper aims to contribute to the debate by evaluating the impact of PSI on industrial firms’ investment. The identification strategy adopted for this purpose was based on complementary matching estimators: Propensity Score Matching and Conditional Differences-in-Differences Matching. Data used came from the Brazilian Industrial Survey on economic activities of firms for the 2007-2010 period and from the BNDES’ records on industrial firms receiving PSI financing in the 2009-2010 period. The empirical results showed a positive impact of PSI on firms’ investment level for both years of this period, even though its magnitude declined in 2010.