 The Risk-Taking Channel and Monetary Transmission Mechanisms in ChinaLi Kang, Rong Guo () and Mei Zhang Asian Economic and Financial Review, 2019, vol. 9, issue 12, 1358-1367 Abstract: This study is one of very few studies which have investigated if the risk-taking channels of monetary policy exist in China and which transmission mechanisms are more significant than others. This study uses a new estimation methodology, dynamic panel GMM estimation, to effectively reduce the endogeneity problem. Using data from forty-seven commercial banks in China during the period of 2006-2016, we find that the risk-taking channel of monetary policy exists in China for various monetary policy instruments, such as statuary reserve ratio, prime lending rate and the growth rate of broad money supply. China’s monetary policy influences bank’s risk-taking through the valuation effect, searching for yield effect, and competition effect, but not insurance effect. Monetary authorities in China should encourage moderate competition in the banking industry, while commercial banks in China should improve their risk management and innovate their business to lower the impact of monetary policy on bank’s risk-taking. Keywords: Monetary policy; Risk-taking channel; Transmission mechanisms; China; Dynamic panel GMM estimation; Bank’s risk-taking; Valuation effect; Search for yield effect; Competition effect; Insurance effect. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:9:y:2019:i:12:p:1358-1367:id:1895 Access Statistics for this article More articles in Asian Economic and Financial Review from Asian Economic and Social Society |
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