Abstract
This article reports evidence of new monetary channels for social inclusion involving basic income policies and the Caixa Econômica Federal, a Brazilian government savings bank. Since the Plano Real (Brazilian currency) and the liberalization of banking in the 1990s, the realization of competitive advantages by the Caixa as social policy agent and the importance of citizenship cards differ from existing theories of bank change, financial inclusion and monetary policy. Multi-method research reveals the importance of 1) political theories of basic income, 2) conceptions of citizenship and social justice, and 3) a back to the future modernization of government banking. This provides alternatives to contemporary market-based banking theory, neo-liberal policies, private and non-governmental microfinance strategies, and theories in political economy about fiscal constraints to social policies. New monetary channels of change also suggest that zero sum theories about politics, monetary authority and social inclusion are amiss.
Highlights
Contrary to expectations about private banks and microfinance, basic income grants and a federal government savings bank have instead proved more effective mechanisms for financial inclusion in Brazil
Multi-method research tested, empirically and theoretically, competing theories about financial inclusion; those emphasizing the greater efficiency of private banking and non-governmental microfinance organizations and, in opposition, new theories that emphasize the institutional foundations of competitive advantage of alternative banks (Butzbach and Mettenheim, 2014), the importance of conceptions of citizenship and social justice, and the mix of basic income grants and savings bank services
We focus on how monetary channels provide new opportunities, and risks, for social policy, public banking and financial inclusion
Summary
Contrary to expectations about private banks and microfinance, basic income grants and a federal government savings bank have instead proved more effective mechanisms for financial inclusion in Brazil. This counters widely accepted theories of monetary policy and fiscal constraints to change. Since transition from military rule and price stability (1994), financial liberalization (1995) and incorporation of new banking technologies during the 2000s, public banking, social policies and conceptions of citizenship and social justice have proved more much effective to reach bankless Brazilians than private banks or microfinance firms, funds, or organizations This is an anomaly for neo-liberal policies, contemporary banking theory, and the international microfinance movement that abhors state banks in favor of private initiative, philanthropy and non-governmental organizations. Our findings build on the rich research and policy debates about microfinance and financial inclusion in Brazil as can be seen in the proceedings of Central Bank of Brazil seminars on microfinance (1999-2008) and Financial Inclusion (2009-) and (Franca Filho et al, 2012; Monzoni, 2008; Neri, 2008; Magalhães and Abramovay, 2007; Mattei, 2002)
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