What if the New Normal Included Using Payment Data to Support Under-Documented Firms? by DANIEL GERSTEN REISS and JOÃO MANOEL PINHO DE MELLO

What if the New Normal Included Using Payment Data to Support Under-Documented Firms?



October 20, 2020

The lack of supporting documents has been reported as a significant obstacle to micro, small, and even medium-sized enterprise (MSME) receiving credit. As MSMEs have relatively weaker controls, they are unable to produce reliable data about their activity to a larger extent. When they are able to produce data, these data are usually not easily verifiable. The wider information failure narrows the odds that MSMEs will obtain bank lending. The traditional response to this fact is to resort to qualitative information, requiring a much closer relationship between banks and credit candidates. Policies, therefore, usually focus on strengthening credit unions and niche banks.

At the same time, central banks utilize a wide variety of data to forecast the economy, aim monetary policy management, and monitor the financial system’s soundness. In the pursuit of these objectives, central banks develop unique databases, which are frequently composed of data collected by the central banks themselves. What if these data were used to tackle the MSMEs’ shortcomings?

For over a decade, collected credit information has been made available by the Brazilian regulator to banks for the purpose of analyzing clients’ credit [1]. However, the outstanding credit balance helps only to determine the client’s available credit capacity. It is of little help for underdocumented MSMEs, as determining their credit capacity is itself the core issue.

Necessary safety measures for guaranteeing community health against COVID-19 have been in place for several weeks in most jurisdictions, causing atypical economic suspensions. Dealing with these suspensions made governments implement rescue programs. If during regular times, reaching smaller businesses is a case for development, during the pandemic, it became a significant challenge to be beaten.

In Brazil, the consequences of the COVID-19 fight were no different than everywhere else, and the government took the stage by adopting economic measures. Alongside many other responses, the Peac-Maquininhas program focused on supporting the recovery of micro and small firms by better enabling the extension of credit to them [2]. In a nutshell, the program consists of government lending, distributed via traditional credit contracts signed between clients and banks. The previous, long-time challenge then presented itself – how to reach these firms and assess their credit capacity? How to collateralize their operations? Payment solutions were the answers provided to both questions; we focus here on the answer to the former [3].

The Operational Answer

Card payments have been centrally cleared and settled in Brazil since 2017. Following international standards, the central bank monitors the privately-owned system that settles these transactions and, as a result, accumulates a large amount of data. These data include acquiring banks’ payments to merchants — that is, the firms’ sales history of card-related payments.

Of the 2.6 million micro and small firms receiving card payments, roughly one-third consist of mom-and-pop shops [4]. The distribution of these firms by their main economic activity is shown in the following graph. 

The detailed figures confirm the link between card payments and less sophisticated firms, which we assume to result from limited access to credit due to the under-documentation argument presented above. Seventy percent of the potential borrowers consists of retail shops or restaurants. Automotive and personal services, health care, extracurricular education, and sports activities follow, consisting of the next 14%. The remaining 17% is spread among 260 different activities. These activities are expected to make up the previously discussed target group.

Arguably, merchants’ banks would also have information on a given firm’s cash flow and would be able to direct government-subsidized credit. This argument does not hold, as a merchant’s data is frequently split across financial institutions. Having a relationship with more than one bank is not uncommon even among smaller firms, and migration across institutions is also not uncommon. In addition to this setup, the private clearinghouse that settles card payments do not provide data aggregation services to end-users, nor is any open banking initiative yet in place.

Therefore, the compilation of card payment history from oversight data must have fulfilled the credit documentation gap within the program’s model. It supported the targeted micro and small firms with a reliable source of information for credit analysis.

The Central Bank of the Future

Big data, when related to central banks, has been treated as being under the SupTech brand. The Bank for International Settlement’s Financial Stability Institute considers SupTech to be the use of modern technology by regulators to support their own work [5]. The data used in the SupTech context have a broader potential. The operational answer provided during COVID-19 is an example of how these data can contribute to mitigating one financial access challenge.

By taking data which are used in the central banks’ traditional oversight role and using it to achieve competition or inclusiveness goals, a discussion follows regarding the additional roles central banks may play. This debate requires discussing whether such roles exceed central banks’ traditional macroeconomic responsibilities and pushes monetary authorities towards microeconomic duties.

Improving micro and small business credit documentation, as was done with Peac-Maquininhas, results in neglectable additional costs, as this solution builds on an existing communication infrastructure between the regulator and the banks. When contrasted with the potential outcomes of broader credit access and potential additional market competition, the benefits outweigh the costs. Nonetheless, the expansion of central bank activities’ scope shall always require caution, as cohesion is fundamental to any organization, including central banks.


Program results are yet to come and to be assessed. Undeniably though, a new use for central bank oversight data has been established. A step through which better extension of financial products to smaller agents has been provided.

Daniel Gersten Reiss is Advisor to the Deputy Governor for Licensing and Resolution at the Central Bank of Brazil and a researcher at the Economics and Politics Research Group, University of Brasilia.

João Manoel Pinho de Mello is the Deputy Governor for Licensing and Resolution for the Central Bank of Brazil, and a full professor with Insper.


[1] Data sharing is always subject to prior and specific client’s consent.

[2] Peac-Maquininhas is a combination of the Portuguese acronym for Emergency Program for Credit Access (Peac) with the word Maquininhas, which relates to the POS terminals used for card sales.

[3] The collateralization solution resorted to the new framework for cards’ receivables and has already been scheduled for November 2020. Repayments are to be automatically handled as acquiring institutions shall pay bank loans directly according to daily card sales. This exciting mechanism is beyond the scope of this post.

[4] Approximately 90% of micro and small firms receive card payments through a scheme that settles via the clearing system. Some schemes – mostly e-money wallets – are exempt from clearing on a firm-by-firm basis. The remaining 10% of firms, for which there is no firm-level oversight data, receive through these systems and are not able to access the government aid.

[5] Simone Di Cartri, et al, FSI Insights on Policy Implementation No. 19: The Suptech Generations, Bank for Int’l Settlements (2019), https://www.bis.org/fsi/publ/insights19.pdf.

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Oportunidade: Free webinar: 72nd Economic Policy Panel

72nd Economic Policy Panel

The October 2020 Economic Policy Panel Meeting, due to take place in Berlin, will instead be held online. One big theme for the conference is the economics of climate change – but there are also new studies of the sustainability of public debt, house prices, gun laws and European banks’ provisioning against non-performing loans.

Fiscal standards for Europe
Olivier Blanchard, Alvaro Leandro, Jeromin Zettelmeyer

Exporting pollution
Itzhak Ben-David, Yeejin Jang, Stefanie Kleimeier, Michael Viehs

Rising UK house prices
David Miles, Victoria Monro

The policy panel on “Fiscal Standards for Europe” will kick off at 5pm CET on Oct. 22. Live stream will be available on this page and you can register here:


Rodrigo Schneider, Skidmore & EPRG, will present the paper: Law, Guns and Money in Brazil on Thursday

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Working paper 103 available now!

Teoria dos Leilões e Aplicações: A Teoria dos Jogos volta roubar a cena no Prêmio Nobel de Economia de 2020

Maurício Bugarin

Este artigo trata dos avanços registrados na teoria do leilões e de suas aplicações, sobretudo a partir de 1990, resgatando as contribuições de dois de seus maiores expoentes, os professores Robert Wilson e Paul Milgrom, recebedores do Prêmio Nobel de Economia de 2020.

The Economics and Politics Research Group started publishing its working papers on June 12, 2013. Please check here every week for a new working paper.

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Lançamento do livro: “Reforma do Estado Brasileiro: Transformando a Atuação do Governo”

Acaba de ser lançado, e está disponível para aquisição a preço reduzido, o livro:

“Reforma do Estado Brasileiro: Transformando a Atuação do Governo”.

O livro, editado pela Atlas/GEN, foi organizado por Fábio Giambiagi, Sérgio Guimarães Ferreira e Antônio Marcos Ambrózio e prefaceado por Armínio Fraga.

Segue a sinopse do livro:

Os desafios da transformação do Estado brasileiro. Este livro traz assuntos essenciais para o funcionamento de um Estado moderno e eficiente: melhor planejamento e organização do serviço público, debates de orçamentos, avaliação de políticas e muito mais.

Fabio Giambiagi, Sergio Guimarães Ferreira e Antônio Marcos Hoelz Ambrózio, ao lado de diversos especialistas, auxiliam na compreensão da importância de uma transformação urgente e necessária no Brasil.

Por que ter Reforma do Estado Brasileiro – Transformando a Atuação do Governo?
Um dos maiores desafios do país é crescer com equilíbrio fiscal, de modo a reduzir as desigualdades por meio da oferta de serviços públicos que respondam a demandas legítimas da sociedade por maior segurança, ensino e saúde, por exemplo. Contudo, para que isso aconteça, é preciso que o Estado consiga entregar o que todos nós esperamos dele, e isso nos leva a um debate muito mais complexo do que uma simples divergência de opiniões.

Uma amostra do livro, o capítulo 3 (Regras Fiscais e Federalismo) pode ser lido aqui.

Os professores Maurício Bugarin e Sérgio Gadelha contribuiram na Parte V desse livro (Como aproximar o governo das preferências e necessidades dos cidadãos?) com o capítulo 12: Descentralização administrativa e de receitas.

O livro está disponível para aquisição, tanto em papel como em e-book aqui.

Veja abaixo o cupom para desconto de lançamento (válido por tempo limitado e somente para a versão impressa do livro).


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Working paper 102 available now!

Ex-ante Moral Hazard of Unemployment Insurance


Artur Henrique da Silva Santos, Maurício Soares Bugarin and Paulo Roberto Amorim Loureiro


Unemployment insurance aims to maintain workers’ consumption while they are unemployed, but may have undesirable effects on the beneficiaries’ labor supply. Theoretical and empirical studies have provided robust evidence of a reduction in the job search effort and an increase in the duration of unemployment, i.e., ex-post moral hazard. By contrast, this paper analyzes the influence of unemployment insurance on the behavior of workers while employed, i.e., ex-ante moral hazard. We use regression kink design and differences-in-differences to estimate the higher probability of termination after workers’ ensure eligibility for the benefit, and after increases in the potential duration of unemployment insurance by one month. Additionally, this paper analyzes the interaction of business cycles with ex-ante moral hazard. Contrary to what one would expect, the probability of termination has a procyclical behavior. The insurance is more widely used in periods of economic expansion than in recessions. According to the theoretical model, this occurs because, in expansion, it is easier to move out of unemployment after the insurance payout, whereas in recession, heading back to the job market is more challenging and, consequently, ex-ante moral hazard is less likely.

Keywords: unemployment insurance; ex-ante moral hazard; regression kink design; nonparametric.

The Economics and Politics Research Group started publishing its working papers on June 12, 2013. Please check here every week for a new working paper.

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Atenção para o prazo de submissão para o encontro SBE!

Prezados(as) Associados(as), boa tarde,

Lembrando que faltam poucos dias para o término da submissão de artigos do 42º Encontro Brasileiro de Econometria (Período de submissão de 10 de julho à 28 de agosto).

Seguem abaixo as informações sobre a submissão.



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Oportunidade: Bolsas de mestrado e doutorado pela Fundação Lemann

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The (Virtual) World Congress of the Econometric Society has started!

The World Congress of the Econometric Society started today!!

Please join the online presentations here: https://eswc2020.duuzra.com/www/?pin=yale

There will be a great number of fantastic presentations. We hope you can enjoy the event! (Click here for additional information)

I (Mauricio Bugarin) will be presenting the paper: “Elections, Heterogeneity of Central Bankers and Inflationary Pressure: The case for staggered terms for the president and the central banker

It will be presented in Session 72: “Topics in Monetary Policy I”, on Thursday, August 20, 2020, at 18:00 UTC, which corresponds to 15:00 in Brasilia and 13:00 in Nashville.

The recorded session is already available on the ESWC 2020 site or directly here on youtube:

Mine is the second of three presentations. It starts around the 33rd minute.

On Thursday, all the presenters will be available online for questions from the audience, only on the WCES’s site.


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Atenção: Inscrição no Exame ANPEC 2021: de 20/7 a 30/9/2020.


O período de inscrição para o Exame ANPEC 2021 inicia-se hoje, 20/07/2020 e termina em 30/09/2020. Em anexo está o Manual de Seleção do Exame ANPEC 2021.

A Coordenação do Exame ANPEC solicita que vocês deem ampla divulgação da abertura do período de inscrição ao Exame ANPEC 2021 junto aos estudantes de graduação, de pós-graduação e ao corpo docente da sua unidade.

Atenciosamente, Lucília

Secretária Exame Anpec



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Atenção: Participe do Virtual World Congress of the Econometric Society – 2020

Atenção: O World Congress da Econometric Society será realizado este ano de forma virtual.

Assim, todos podem participar com uma taxa de inscrição módica de 10 dólares. Vejam anúncio abaixo.

The Econometric Society
May 20, 2020 www.econometricsociety.org


August 17, 2020-August 21, 2020

To register, please click here

Registration Dates:
Registration opens: May 19, 2020
Presenter registration deadline: Sunday June 7, 2020
Non-presenter registration deadline: Friday August 7, 2020

Presenter Registration Fees: 
(Presenters must register by June 7 to be included in the program)
ES Member; high-income countries: $100
ES Member; student or low-, low-middle, or upper-middle income countries: $50
See World Bank link for countries by income.

Non-Presenter Registration Fee, all categories: $10

Additional Information
Additional information can be found at http://www.eswc2020.org.

Program Chairs: Victor Chernozhukov (MIT), Emmanuel Farhi (Harvard), Johannes Hörner (Yale) and Eliana La Ferrara (Bocconi)

Local Organizing Committee: Massimiliano Marcellino (Chair), Jerome Adda, Maristella Botticini and Marco Ottaviani

Virtual World Congress Committee: Larry Samuelson, Chair (Yale), Isaiah Andrews (Harvard), Orazio Attanasio (Yale), Johannes Hörner (Yale), Massimiliano Marcellino (Bocconi), Francesca Molinari (Cornell), Guido Tabellini (Bocconi)

World Congress Main Lecturers
Orazio Attanasio (Yale), Presidential Address
Esther Duflo (MIT), Fisher-Schultz Lecture
Roger Koenker (UIUC/UCL), Walras-Bowley Lecture
David Pearce (NYU), Frisch Memorial Lecture
Robert Shimer (Chicago), Cowles Lecture

Confirmed Semi-Plenary Lectures
Beliefs in Macroeconomics
Nicola Gennaoioli (Bocconi University)
Yuriy Gorodnichenko (Berkeley)

Contests and Contracts
Juuso Välimäki (Aalto University Helsinki)
Thomas Mariotti (Toulouse School of Economics)

Frontiers of Modern Econometrics  
Alfred Galichon (NYU)
Stéphane Bonhomme (University of Chicago)

Frontiers of Time Series Econometrics
Raffaella Giacomini (UCL)
Anna Mikusheva (MIT)

Human Capital and Intergenerational Mobility
Janet Currie (Princeton University)
Nick Papageorge (Johns Hopkins University)

Macroeconomic Policy   
Monika Piazzesi (Stanford University)
Ivan Werning (MIT)

Modern Causal Inference
Alberto Abadie (MIT)
Christian Hansen (The University of Chicago Booth School)

Social Interactions and Development
Abhijit Banerjee (MIT)
Matt Jackson (Stanford)

Topics in Industrial Organization
Leslie Marx (Duke)
Volker Nocke (University Mannheim)

Topics in Microeconomic Theory  
Philippe Jehiel (UCL and PSE)
Alexander Wolitzky (MIT)

Confirmed Policy Sessions
AI and ML in Empirical Research
Esther Duflo (MIT)
Guido Imbens (Stanford Graduate School of Business)
Victor  Chernozhukov (MIT/Amazon)
Vasilis Syrgkanis (Microsoft.com)

Climate Change  
Philippe Aghion (Harvard University)
Per Krusell (Stockholm University)
Esteban Rossi-Hansberg (Princeton University)

Consumer Data and IT Firms: Customization vs. Discrimination
Phillip Leslie (Amazon)
Jacques Cremer (Toulouse School of Economics)
Steve Tadelis (Berkeley)

Pinelopi Koujianou Goldberg (Chair) (Yale University and the World Bank)
Oriana Bandiera (London School of Economics)
Richard Blundell (UCL)
Jan Eeckout (UPF-GSE Barcelona)

Trade Wars and Trade Talks
Giovanni Maggi (Yale University)
Ralph Ossa (Zurich)
Steve Redding (Princeton)

In addition to the live presentations above, 1,428 papers from scholars representing every region of the world have been accepted for presentation. In order to accommodate multiple time zones and the complexity of organizing the presentation of 1,428 papers, the organizers decided that papers will be pre-recorded in sessions of four with live scheduled Q&A during the week. Once recorded, sessions will be available on the web site in a password-protected resource library to be accessed throughout the week.

We are very excited about this format because it allows all presenters to work around time zones and potential technical glitches to present their work while still interacting with and receiving feedback from colleagues.

At the same time, several unique software features will be available throughout the meeting including live networking rooms, chat functions, virtual booths, leaderboards tracking presentation visits and daily participation in the Congress, among other features. The Society will also present live its Frisch Medal and other awards. Finally, while we cannot visit Bocconi University and Milan in person, Bocconi University’s beautiful buildings, surrounding city and hospitality will be available virtually during the full Congress.

We have set registration fees for presenters and non-presenter attendees at rates designed to cover the costs of the software and staffing. We hope all of you will register as soon as possible (and no later than June 7 to be included in the program) and encourage your colleagues to register too at the $10 non-presenter rate.

To register, please click here

Registration Dates and Fees:
Registration opens: May 19, 2020
Presenter registration deadline: Sunday June 7, 2020
Non-presenter registration deadline: Friday August 7, 2020

Presenter Registration Fees:
(Presenters must register by June 7 to be included in the program)
ES Member; high-income countries: $100
ES Member; student or low-, low-middle, or upper-middle income countries: $50
See World Bank link for countries by income.

Non-Presenter Registration Fee, all categories: $10

While the presenting author must pay the presenter registration fee by the deadline, co-authors wishing to register may pay the non-presenter fee and follow that deadline.

Countries by income category are defined by the World Bank, here (once in list, scroll down for country-by-income lists). Please note that the criterion for reduced fee is not nationality but country of work so that a national of Ukraine or Turkey, for example, working in North America is not eligible.

Students: A ‘student’ is defined as somebody registered in an academic program at the time of registration. If you are registering as a student, please send a scanned copy of your student ID or some similar verification to Charles.cai@econometricsociety.org during the registration process. Failure to provide this documentation could result in your registration being delayed or withdrawn.

Membership in the Econometric Society
While membership is not required for non-presenters, we would welcome your support. To join or renew a membership, please visit http://www.econometricsociety.org/user/register.

General questions may be sent to generalmanager@econometricsociety.org and queries about the scientific portion of the program to program chairs: Victor Chernozhukov (Econometrics) chernozhukov@gmail.com, Emmanuel Farhi (Macro) emmanuel.farhi@gmail.com, Johannes Hörner (Theory) joh.horner@gmail.com or Eliana La Ferrara (Applied) eliana.laferrara@unibocconi.it.


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