The article analyses the Brazilian experience in financing economic activity from the 1964–67 reform until the 1990s. Two issues are addressed: first, what conditions explain the development of a model based on public and external credit in Brazil, quite different from the capital market based system conceived in the 1964–67 reform? Second, what are the perspectives for the development of an alternative model in the country, led by the national private sector? Based on international experience, two alternatives are considered: a) the expansion of the capital market, in order to make possible large scale direct financing; b) the formation of a private banking credit system, complementing or replacing both public and external credit. Despite undoubted improvements, tendencies observed up to 1997 suggest the persistence of the ‘short-termist’ profile that typically characterised the Brazilian financial system. Thus, the development of both capital market and banking credit models depends on financial policies devoted to this goal. General guidelines for such policies are suggested in the last section of the paper.