Brazilian banking system delays economic recovery, impacting monetary policy effectiveness.
The study looks at how the Brazilian banking system affects the country's economy using a complex model. The researchers found that the banking sector, with its different interest rates and adjustment costs, can delay the impact of monetary policy on the economy. They also discovered that shocks to bank capital can have a big effect on the real economy. The model used in the study was originally designed for the European economy, and this research provides a comparison with Brazil's more intricate financial system.