Asymmetric impacts of monetary policy and business cycles on bank risk-taking: Evidence from Emerging Asian markets

Duy-Tung Bui, Canh Phuc Nguyen and Thanh Su

The Journal of Economic Asymmetries, 2021, vol. 24, issue C

Abstract: The paper examines the asymmetric impacts of monetary policy and business cycles on bank risk-taking. Using a sample of 212 banks in 13 emerging Asian economies over 2009–2019, the findings claim that the impacts of monetary policy and macroeconomic fluctuations are conditional on bank-individual characteristics. Our research has highlighted the procyclicality of bank risk-taking. Banks are more stable during boom cycles and riskier during bust cycles. Furthermore, the impacts of economic upturns and downturns also depend on bank-specific features, such as size, liquidity, and capitalisation. We provided further evidence demonstrating that bank size, capitalisation, efficiency, and diversity also play a vital role in reducing the adverse consequences of an expansionary monetary policy on bank risk-taking. Policy discussions are also discussed.

Keywords: Bank risk-taking; Emerging markets; Asia; Asymmetric effects (search for similar items in EconPapers)
JEL-codes: E58 G32 G38 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:24:y:2021:i:c:s1703494921000268

DOI: 10.1016/j.jeca.2021.e00221

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