Does Macroprudential Policy Reduce Bank Risk-Taking?

Yongkui Li (), Qixuan Du and Jinli Liu
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Yongkui Li: Southwest University of Political Science & Law, School of Economics
Qixuan Du: Southwest University of Political Science & Law, School of Economics
Jinli Liu: Southwest University of Political Science & Law, School of Economics

A chapter in Proceedings of the 10th Annual Meeting of Risk Analysis Council of China Association for Disaster Prevention (RAC 2022), 2023, pp 323-329 from Springer

Abstract: ABSTRACT Based on the unbalanced panel data of 141 commercial banks in China from 2008 to 2020, this paper uses difference‐in‐differences models to study the impact of macroprudential policies on banks' risk-taking. The empirical results show that China's implementation of macro-prudential policies can effectively improve the effect of bank risk prevention. Further heterogeneity analysis found that, compared with banks with lower capital adequacy ratios, macro-prudential policies had a more significant impact on the risk-taking behavior of commercial banks with higher capital adequacy ratios. Commercial banks with higher operating efficiency implement macro-prudential policies based on higher capital regulatory requirements, which have a more significant effect on their risk-taking. Based on the research conclusions, this paper puts forward relevant policy recommendations to strengthen the supervision of bank capital in a differentiated way.

Keywords: Macroprudential policy; Bank risk-taking; Difference-in-differences (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-194-4_45

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