The banking sector plays a central role in the economy's functioning, and it is incredibly concentrated. Although highly developed and well regulated with high-level technology, Brazil's banking industry is highly concentrated. Its five most prominent institutions hold 85% of its financial assets, making Brazil one of the world's most concentrated markets. Credit portability has been advocated as an important instrument to promote competition in the banking industry. In 2014, the Brazilian Central Bank (BCB) implemented a regulatory norm to facilitate consumers' credit portability. This institutional change provides an interesting setting for an empirical investigation of banking competition's effects on household consumption and economic activity in Brazil.In our initial regressions, we find robust and economically relevant support that the credit portability boosted the volume of loans in the analyzed period. Finally, we intend to develop and estimate an equilibrium model of heterogeneous agents for the consumer credit market to address welfare implications and alternative policy designs.
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