What does peer-to-peer lending evidence say about the risk-taking channel of monetary policy?

Yiping Huang, Xiang Li and Chu Wang

No 16/2019, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: This paper uses loan application-level data from a peer-to-peer lending platform to study the risk-taking channel of monetary policy. By employing a direct ex-ante measure of risk-taking and estimating the simultaneous equations of loan approval and loan amount, we are the first to provide quantitative evidence of the impact of monetary policy on the risk-taking of nonbank financial institution. We find that the search-for-yield is the main workhorse of the risk-taking effect, while we do not observe consistent findings of risk-shifting from the liquidity change. Monetary policy easing is associated with a higher probability of granting loans to risky borrowers and a greater riskiness of credit allocation, but these changes do not necessarily relate to a larger loan amount on average.

Keywords: Monetary Policy; Risk-taking; Nonbank Financial Institution; Peer-to-Peer Lending; Search-for-yield; Risk-shifting (search for similar items in EconPapers)
JEL-codes: E52 G23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/212924/1/bofit-dp2019-016.pdf (application/pdf)

Related works:
Journal Article: What does peer-to-peer lending evidence say about the Risk-Taking Channel of monetary policy? (2021)
Working Paper: What Does Peer-To-Peer Lending Evidence Say about the Risk-Taking Channel of Monetary Policy? (2019)
Working Paper: What does peer-to-peer lending evidence say about the risk-taking channel of monetary policy? (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2019_016

Access Statistics for this paper

More papers in BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().