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Financialization and Local Scale Dynamisms

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Book cover The Financialization of the Brazilian Territory

Part of the book series: Economic Geography ((ECOGEO))

Abstract

This chapter analyzes some of the specificities of the financialization of Brazilian territory in the local scale. First, the process of credit diffusion to low-income populations is highlighted, showing also the importance of public income distribution policies carried out between 2003 and 2016. The recent development of three main types of “local” financial agents is also explained: credit cooperatives, community banks, and fintechs. It should be emphasized that each of these, in different ways, operates from decentralized—or non-monopolistic—logics. Two of them—the cooperatives and community banks—are not strictly financial, and encourage the engagement of populations in different aspects of their local everyday life, constituting in concrete forms of possible structural changes in financialization as we know it nowadays.

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Notes

  1. 1.

    We will work in this text the definitions proposed by Barone and Sader (2008, p. 1250) for the terms: “microfinances” and “microcredit.” The microfinances are the most general phenomenon of diffusion of financial variables for poor population, i.e., “the offer of financial services (productive credit, credit for consumption, savings account, insurance, etc.) for the low-income population that usually has no access to these services by the traditional financial system.” The microcredit may be defined as “all financial services for micro-entrepreneurs, excluding the credit for consumption.”

  2. 2.

    Banco Grameen created by him, unlike the “traditional” retail banks, started to use several simple procedures to grant small amount loans to the low-income population of the country, demonstrating to be possible an expressive reduction of costs, a more solidary use of credit and finances, in order to reach “the satisfaction of the necessities of people and assure their well being” (Yunus 2001, p. 174).

  3. 3.

    For the author, the interest reduction process with the diffusion of consigned payroll loan occurred, “also due to the guarantees, once the financing debits with salaries, pension or retirement may reduce significantly the default risk, which tend to push down funding rates” (Levorato 2009, 180).

  4. 4.

    In return for these facilities that were made available by new types of banking accounts, the following conditions were stipulated for their use: the simplified account shall be the only account of the account holder; the maximum limit balance was R$ 1,000.00, at any moment (as well as the limit of deposits); their movement is made only by magnetic/debit card (checks are not offered for its manipulation); finally, the account holder would be entitled to perform only four withdraws, four withdraws of statements, and/or four deposits without charging rates from account holders (Levorato 2009, 184).

  5. 5.

    The families considered “extremely poor” are those that have monthly income utmost R$ 85.00 per person. The families considered “poor” are those that have a monthly income between R$ 85.01 and R$ 170,00 per person. The poor families can join the program once they have in their composition pregnant woman and child or adolescent from 0 to 17 years old. (Source: http://mds.gov.br/area-de-imprensa/noticias/2018/maio/bolsa-familia-atende-mais-de-13-9-milhoes-de-beneficiarios-em-maio).

  6. 6.

    The cooperative of Rochdale Equitable Pioneers, created in 1844 in the English city of the same name, is considered the “mother of all cooperatives” (Singer 2002, 39). The principles set forth therein ended up becoming “universal principles” of cooperativism: (1) each cooperative member would be entitled to one vote, independent of how much invested in it; (2) the number of cooperative participants would always be open, being possible to accept all those wishing to associate to the cooperative (Singer 2002, 39).

  7. 7.

    Available at: http://www.institutobancopalmas.org/o-que-e-um-banco-comunitario/ (Accessed on 31.01.2019).

  8. 8.

    The Banco Popular do Brasil was a financial institution created in 2003 as a subsidiary of Banco do Brasil, exclusively aimed at promoting the banking and financing activities of low-income populations. The Federal Government created it in an effort to develop microfinance institutions focused on financing activities that generate work and income in the poorest cities/communities in Brazil. The federal institutions that focused on the promotion of microfinance were (1) National Economic and Social Development Bank—BNDES (with specific credit lines), (2) Banco Popular do Brasil, (3) development agencies, and 4. public banks with specialized portfolio, such as the Crediamigo program of Banco do Nordeste (Soares and Sobrinho 2008, 141).

  9. 9.

    In addition to being responsible for the creation of the Banco Comunitário União Sampaio, the Popular Union of Women “has a wide intersectoral activity that makes it present in several segments of the community. It develops a wide range of activities and initiatives aimed at the emancipation of women, equality in social, and gender relations, and the full realization of social, economic, political, environmental, and cultural rights.” Available at https://uniaopopmulheres.org.br/quem-somos/ (Access on 19/01/2019).

  10. 10.

    Available at: http://www.institutobancopalmas.org/wp-content/uploads/moedas-TRANSI%C3%87%C3%83O-vers%C3%A3o-final.pdf. Accessed on 19/01/2019.

  11. 11.

    Available at http://www.institutobancopalmas.org/palmas-e-dinheiro/ (Access in 23.05.2018).

  12. 12.

    Available at https://www.abfintechs.com.br/sobre.

  13. 13.

    Available at http://fintechlab.com.br/index.php/2018/08/13/novo-radar-fintechlab-mapeia-mais-de-400-iniciativas/ (Access in 10.01.2019).

  14. 14.

    Available at https://magnetis.com.br/quem-somos (Access in 20.03.2019).

  15. 15.

    Available at https://www.original.com.br/sobreobanco/ (Access in 21.01.2019).

  16. 16.

    Avaiable at https://www.original.com.br/docs/relations/results/conglomeradoFinanceiroOriginal/2019/DF-Conglomerado-Financeiro-Original-1-semestre-2019.pdf.

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    Fabio Betioli Contel

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Contel, F.B. (2020). Financialization and Local Scale Dynamisms. In: The Financialization of the Brazilian Territory. Economic Geography. Springer, Cham. https://doi.org/10.1007/978-3-030-40293-8_3

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