Brazil’s Financial Centers in the Twenty-first Century: Hierarchy, Specialization, and Concentration

Abstract

The purpose of this article is to examine how the geography of Brazil’s financial centers changed since 2000 in terms of financial center hierarchy, specialization, and spatial concentration. To address these questions, we use data on employment and mergers and acquisitions in financial and business services, complemented with data on remuneration and bank assets. Our results show that São Paulo has consolidated its dominance as Brazil’s primary financial center, with market for corporate control as an important channel of this process. Rio’s decline as a financial center, which started more than fifty years ago, has continued into this century. At the same time, Brasília has emerged as the third most important financial center of Brazil. We document the recent dynamic of this territorial division of labor, with Rio’s specialization in insurance and Brasília’s dependence on government-owned banks. Finally, we show signs that Brazil’s financial center activities might be following an inverse U-shaped pattern whereby increasing geographical concentration is followed by its slow decline. Key Words: Brazil, concentration, financial centers, São Paulo, territorial division of labor.