Local impacts of support for credit cooperatives: an evaluation of BNDES Procapcred in the context of Covid-19

Abstract

This paper evaluates local impacts of a policy aimed to support cooperative financial institutions in Brazil. We use data from BNDES Procapcred financing at the municipality level during the Covid-19 economic crisis (2020-21) and from the Brazilian Central Bank on cooperative members to this end. The analysis compares members’ outcomes at the supported municipalities to those outcomes in comparable non-supported elegible municipalities. Our empirical approach is based on two propensity score matching Differences-in Differences estimators. We obtain positive effects of Procapcred in the number of members with credit operations and in the number of members with time deposits by municipality, especially for household members. The effects are also larger in municipalities with high dependency on services from other municipalities and those with a shallower banking credit market.