Clientelism? Opportunism? Both? Or neither? Evidence of the effect of political alignment on the provision of official credit to Brazilian municipalities

Abstract

This study investigates whether municipal governments whose heads of the executive power is politically aligned with the federal government receive official loans – in particular, from the Brazilian Development Bank (BNDES) – of greater amounts or with better repayment conditions, as well as whether the granting of these loans varies according to the electoral calendar. By using Heckman (1979)’s sample selection model and exploring data from 2002 to 2020, the results suggest that both the probability of being funded and the loans characteristics (amount, amortization period, grace period and interest rate) are related to these two political factors.