The effects of government debt on banks’ risk-taking: international evidence

Xiaowei Huang and Li Yu

Applied Economics Letters, 2023, vol. 30, issue 2, 108-113

Abstract: We empirically investigate the effects of government debt on banks’ risk-taking by using a dataset covering 10,122 banks located in 65 countries between 2009 and 2019. We find that a greater supply of government debt can increase risk-taking of banks. This positive relation is stronger for domestic government debt, or for banks with higher level of capitalization and loans to deposits.

Date: 2023
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DOI: 10.1080/13504851.2021.1977230

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