Can Low Interest Rates be Harmful: An Assessment of the Bank Risk-Taking Channel in Asia

Arief Ramayandi, Umang Rawat () and Hsiao Chink Tang ()
Additional contact information
Umang Rawat: Faculty of Economics, University of Cambridge, Postal: Austin Robinson Building, Sidgwick Avenue, Cambridge CB3 9DD, UK
Hsiao Chink Tang: Asian Development Bank, Postal: 6 ADB Avenue, 1550 Metro Manila, Philippines

No 123, Working Papers on Regional Economic Integration from Asian Development Bank

Abstract: Events surrounding the global financial crisis have brought to light the potential role of monetary policy in precipitating the crisis. Numerous studies on advanced economies have documented a significant negative relationship between interest rates and bank risk-taking. This paper also finds the presence of the risk-taking channel based on a panel of publicly listed bank data in Asia. Using both annual and quarterly data, "too low" interest rates are found to lead to an increase in bank risk-taking.

Keywords: Bank risk-taking; interest rates; panel data; monetary policy; Asian banks (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2014-01-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cwa, nep-mac, nep-mon and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://aric.adb.org/pdf/workingpaper/WP123_Tang_Assessment_Bank_Risk_Taking.pdf Full text (application/pdf)

Related works:
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:ris:adbrei:0123

Access Statistics for this paper

More papers in Working Papers on Regional Economic Integration from Asian Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Ivan B. de Leon ().