The determinants of the evolution of the Brazilian Development Bank credit guarantee system: a puzzle?

This article addresses a policy puzzle: how did Brazilian Development Bank (BNDES)’s credit guarantee instrument for micro, small, and medium-sized enterprises (MSMEs) evolve and expand, with efficacy, efficiency, and effectiveness, over 25 years, navigating four distinct political administrations, national economic volatility, and at least two major international crises? To answer this question, the article analyses four generations of credit guarantee facilities implemented by BNDES between 1998 and 2023, examining their design features, outcomes, and impacts, as well as the internal and external factors that shaped their evolution. The study adopts an inductive approach in which concepts and evidence inform each other. Evidence is drawn from secondary sources of information, official documents from BNDES, and the authors professional experience. The analytical framework is anchored in a resource-based perspective, inspired by the State dynamic capabilities literature and policy-oriented, resource-based approaches. The article argues that BNDES’s credit guarantee system evolved through gradual organizational learning and sustained problem-solving with public and private stakeholders, rather than through a single reform or stable political backing. Its durability stems from the layered accumulation of political legitimacy, bureaucratic capacity, financial and technical autonomy, technological capability, and stakeholder consensus. Together, these resources enabled an “iterative and adaptive capability to change,” allowing the system to adjust to crises and shifting economic conditions while preserving its core mission of MSME support under prudent risk management. This article contributes to conceptual and practical debates on how public agencies sustain effective long-term interventions across varying economic and political contexts.