Abstract
This study investigated the effects of monetary policy changes on Brazilian banking efficiency during crises through data envelopment analysis and difference of means tests between March 2001 and June 2014. The results indicate an increase in the effectiveness of the banking sector given changes in domestic monetary policy, especially, in terms of allocative and economic efficiencies during a crisis.
Highlights
Banking activity is strongly influenced by internal and external monetary policies, in addition to shocks that affect the demand or supply of money, such as economic crises (Mishkin, 2000; Wolters et al, 2014)
Since this study aims to analyze the impact of changes in monetary policy on the efficiency of the Brazilian banking sector during crises, t-tests were performed to compare the means of the efficiency indices calculated for each period, that is, to determine whether the efficiency of the sector was affected by the changes in the monetary policy in different periods
Studies report that the Brazilian banking sector has not evolved in terms of efficiency (Paula & Faria, 2007; Staub et al, 2010; Gomes et al, 2017), and the results presented in this study agree with this statement, the banks have been increasing the level of efficiency when facing a contractionary monetary policy during crises
Summary
Banking activity is strongly influenced by internal and external monetary policies, in addition to shocks that affect the demand or supply of money, such as economic crises (Mishkin, 2000; Wolters et al, 2014). In the 2000s, with the Brazilian economy already stabilized, changes in the domestic monetary policy and economic crises affected the Brazilian banking system (Giambiagi et al, 2005). In this context, it is crucial for the responsible authority to conduct monetary policy credibly, thereby boosting the confidence of market agents during a crisis (Mishkin, 2000). It is crucial for the responsible authority to conduct monetary policy credibly, thereby boosting the confidence of market agents during a crisis (Mishkin, 2000) Among these market agents, banks stand out, with their role in maintaining the allocation of resources between surplus and deficit agents (Giambiagi et al, 2005). This study analyzes the impact of changes in Brazil’s monetary policy on Brazilian banking efficiency during crises
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