The preponderance and influence of the public sector in the financial system have long been a defining characteristic of Brazilian capitalism. While exerting control over the national credit system through targeted lending policies and other regulatory tools, the federal government also wields significant weight through its state-owned institutions. This article delves into the role of Banco do Brasil (BB), a prominent financial institution and policymaking instrument of the Brazilian government, during the zenith of the developmental state between 1964 and 1982. In contrast to the prevailing focus on financing public spending, this study investigates the international engagements of BB and unveils its participation in managing the country’s external imbalances. BB’s financing proved crucial in bypassing the IMF and reinforcing the government’s commitment to industrialization and developmentalism. The article offers new insights into the forces of Brazil’s state-led finance and the political economy shaping its current banking and regulatory landscape.

This article explores the international expansion of Mexican banks and its implications for the domestic banking system during the decade leading up to the 1982 debt crisis. In contrast to the prevalent focus in the literature on profitability and performance, I examine the asset and liability structure of the banking sector and show that there were clear signs of deterioration in its financial condition well before the onset of the crisis. Financial statement analysis reveals that the banks engaged in international lending and foreign funding were the ones with the greatest propensity to be adversely affected by this problem. The international expansion of Mexican banks emerged and developed as an exit option to domestic funding problems and increasing competition from foreign bank loans, in a context of growing needs for financing and foreign exchange in Mexico.