The impact of public banks on municipalities: a study of the bank of Pará

Abstract

This study examines the influence of the State Bank of Pará, a development bank, on the socioeconomic growth of municipalities in the State of Pará, Brazil. Unlike commercial banks that often reduce their branch network, Banpará has expanded its presence in almost all municipalities. Using spatial econometrics and impact assessment methodologies, the study measures the impact of Banpará branches on these municipalities. The results demonstrate a positive effect contributing to higher gross value added (GVA) in the services sector and public administration of Pará. Additionally, municipalities that established a Banpará branch between 2010 and 2019 exhibited positive results in salaries and production. These findings highlight the critical role of development banks in prioritizing socioeconomic development and fostering inclusive growth.