Monetary Policy and Bank Risk-Taking in Sub-Sahara Africa

Gabriel Aboyadana ()

The European Journal of Applied Economics, 2021, vol. 18, issue 1, 15-38

Abstract: Monetary policy has been shown to influence the risk-taking behaviour of banks in Europe and North America. Africa has however received limited attention in this regard. This study contributes to the monetary policy and bank risk-taking literature for sub-Sahara Africa by examining a panel of commercial banks from 2001-2015 for different types of risks. We find that monetary policy significantly influences bank risk-taking both statistically and economically, but the effect differs across the types of risks. Bank size and profitability are important in determining how effective monetary policy impacts risk-taking. The effects are stronger for countries without exchange rate controls. In terms of policies, monetary authorities intending to pursue expansionary monetary policy must remedy the risk-taking response by banks.

Keywords: risk-taking; financial crisis; monetary policy; africa (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sng:ejae01:143

DOI: 10.5937/EJAE18-28152

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