Banks take advantage of Brazil’s geography, says paper

centralbank-brazil

Brazilian banks practice price discrimination by charging higher loan rates in areas where they hold more monopoly power, according to a working paper published by the Central Bank of Brazil in November.

The author, Bruno Martins, says the Brazilian banking sector features varied market structures among different locations that exist as a result of asymmetric information and transportation costs, which make borrowers "prefer" local lenders.

Consequently, banks are able to take advantage of

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