BEHAVIOR OF THE TEN LARGEST BRAZILIAN BANKS DURING THE SUBPRIME CRISIS: AN ANALYSIS BASED ON FINANCIAL INDICATORS

Abstract

The aim of this paper is to demonstrate the behavior of the ten largest Brazilian banks between June 2008 and September 2009, based on the analysis of financial indicators. Therefore, 16 three-monthly indices were calculated, extracted from financial statement information, which characterizes a documentary research. The indices were separated in five categories: liquidity, capital, profitability, income and market. The obtained results appointed that most financial institutions in the sample were able to manage their resources so as to gain conditions to maintain credit initially. Then, as from the first term of 2009, driven by public banks, they increased their credit operations. In addition, most banks revealed an anti-cyclical trend to encourage productive activities, preferably activities with higher liquidity levels, to the detriment of profitability, which reveals a more conservative attitude. Finally, it was verified that government initiatives, the Brazilian economic balance and the resources the banks offered helped to produce an environment to reactivate business activities during the most acute period of the subprime crisis.