The restructuring of the Brazilian financial system in the 1990s: concentration and internationalization of banking

Abstract

This paper analyzes the changes that took place in the 1990s after the adoption of some of the premises based on the Washington Consensus, which directly influenced the restructuring of the Brazilian Financial System. The objective is to demonstrate that, by and large, the 1990s were characterized by an intense restructuring process in which new rules for the regulation of the banking sector were created, especially after the implementation of Plano Real — rules which have contributed to relevant transformations in the Brazilian Financial System. After the Regulation Act, with the implementation of restitution programs (PROER and PROES) by the government, important changes in the Brazilian Financial System have occurred. These programs besides the competitiveness in which the banking system found itself in in the postreal (the currency) period, collaborated to a substantial reduction in the presence of the public sector in the banking system, and to a process that deepened its concentration as a whole — together with lax laws that allowed foreign capital entry — resulting in a considerable increase in foreign investment in the domestic market.