Brazilian banks use market power to raise cost of credit – BIS paper

Brazilian banks use their market power to raise lending rates, leading to a higher cost of credit, research published by the Bank for International Settlements finds.

Authors José Renato Haas Ornelas, Marcos Soares da Silva and Bernardus Nazar Van Doornik examine the balance between market power and informational advantages. They note that market power will tend to raise the cost of credit, but note this could be offset by “relationship lending”, where a long-term relationship allows the bank