Financial Crisis Prevention and Repression in India and Brazil

In this chapter we continue our evaluation of our main claims, testable hypotheses and corollaries associated with these hypotheses by analyzing the cases of Brazil and India in line with a most-similar cases comparative study. Brazil from the late 1990s to the early 2000s represents countries which entered an IMF program in the context of low shadow bank concentration. Thus, it allows us to test the validity of arguments relating to the importance of high shadow bank concentration in IMF-assisted countries underlying Hypothesis 1. India from 1995 to 2008 represents a case where the country did not participate in an IMF program while the shadow bank concentration is sufficiently (especially relative to Brazil) high. Thus, the India case helps us understand how the absence of IMF program may influence the prospects of financial crisis even if shadow banks have sufficient market leverage in the banking sector. We use analytical narratives based on qualitative historical evidence, open-ended interviews of the central actors in our theoretical story and descriptive time-series data on foreign portfolio investment flows and exchange rate movements to conduct our analysis.