Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299496 
Year of Publication: 
2023
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1526
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
Most aggregate theories of financial frictions model credit available at a cost of financing equal to the savings rate but rationed. However, using a comprehensive firm-level credit registry, we document both high levels and high dispersion in ex post credit spreads to Brazilian firms. We develop a quantitative dynamic general equilibrium model in which dispersion in spreads arises from intermediation costs and market power. Calibrating to the Brazilian data, we show that, for equivalent levels of external financing, spreads have profound impacts on aggregate development indeed moreso than credit rationing does and spreads yield firm dynamics that are more consistent with observed patterns.
Subjects: 
Financial frictions
Credit spreads
Aggregate misallocation
JEL: 
O11
O16
E22
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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