Macroeconomic Factors, Industrial Indexes and Bank Spread in Brazil

TL;DR

This study identifies macroeconomic factors and industrial indexes that influence the bank spread in Brazil from 2011 to 2015, highlighting how industry growth and employment can reduce banking costs.

Contribution

It provides a detailed analysis of how specific macroeconomic and industrial variables affect bank spreads in Brazil, considering industrial subclassification and using multivariate regression.

Findings

Industrial production and GDP reduce bank spreads.

Unemployment and EMBI+ increase bank spreads.

Certain consumer goods indexes negatively influence spreads.

Abstract

The main objective of this paper is to Identify which macroe conomic factors and industrial indexes influenced the total Brazilian banking spread between March 2011 and March 2015. This paper considers subclassification of industrial activities in Brazil. Monthly time series data were used in multivariate linear regression models using Eviews (7.0). Eighteen variables were considered as candidates to be determinants. Variables which positively influenced bank spread are; Default, IPIs (Industrial Production Indexes) for capital goods, intermediate goods, du rable consumer goods, semi-durable and non-durable goods, the Selic, GDP, unemployment rate and EMBI +. Variables which influence negatively are; Consumer and general consumer goods IPIs, IPCA, the balance of the loan portfolio and the retail sales index. A p-value of 05% was considered. The main conclusion of this work is that the progress of industry, job creation and consumption can reduce bank spread. Keywords: Credit. Bank spread. Macroeconomics. Industrial Production Indexes. Finance.