Introduction

Until 2008 developing countries systematically fared worse during financial crises. After Mexico declared a moratorium on foreign debt in 1982, most of Latin America remained mired in a lost decade. During the 1990s the global south and east experienced financial crises in a seemingly endless sequence: Mexico, 1994–5; Asia, 1997; Russia, 1998; Brazil, 1999; Argentina and Turkey, 2001; Brazil, 2002–3. In 2007 panic in US financial markets quickly spread around the globe, only to find that BRIC countries were better prepared to counter shocks and resume growth. This chapter explores our findings about Brazilian federal government banks (that, since liberalization, they have modernized and realized competitive advantages to provide critical policy alternatives, most notably against crisis and for social inclusion) compared to Russia, India and China. Further research will be required; other factors mattered and barriers to competition remain, especially in Russia and China. However, evidence from monetary authorities and comparison of bank balance sheets suggest that BRIC government banks did indeed realize competitive advantages over private and foreign banks during the 2000s, just in time to provide counter-cyclical credit in 2008. And contrary to biases in microfinance studies against the public sector, BRIC government banks have helped accelerate financial inclusion through new policies and technologies.