Why is bank credit in Brazil the most expensive in the world?

The article reviews the scientific literature about the determinants of credit spreads in Brazil. Econometric evidence shows that market concentration, a proxy for (un)competitive behavior, is statistically significant for all studies surveyed. We posit that that higher concentration is part of a well-defined strategy by the Central Bank of Brazil that favors prudence over efficiency. Other variables that help explain why spread in Brazil is among the highest in the world include market microstructure, operating costs, credit risk, opportunity costs, managerial quality, nominal interest rates (SELIC), market concentration, interest rate volatility, earmarked credit, and GDP.