EconPapers    
Economics at your fingertips  
 

Re-exploring the nexus between monetary policy and banks'risk-taking

Melchisedek Joslem Ngambou Djatche

Post-Print from HAL

Abstract: In this paper, we analyse the link between monetary policy and banks' risk-taking behaviour. Some theoretical and empirical studies show that monetary easing is increasing banks' appetite for risk related to asset valuation and the search for higher yield. However, the low interest rate environment that began in 2010 is casting doubt on these findings. Our study adds to analyses of the monetary risk-taking channel considering non-linearity, especially testing threshold effects in this channel. Using a dataset of US banks, we find that the impact of low interest rates on banks' risk behaviour depends on the previous monetary regime, that is on the deviation of monetary rates from the Taylor rule. We complement the literature on the Taylor rule and provide arguments that extend the use of the Taylor rule by Central Banks to financial stability purposes.

Keywords: Monetary policy; financial stability; bank risk-taking; non-dynamic panel threshold model (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02144522
References: Add references at CitEc
Citations: Track citations by RSS feed

Published in Economic Modelling, Elsevier, inPress, ⟨10.1016/j.econmod.2019.01.016⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Re-exploring the nexus between monetary policy and banks' risk-taking (2019) Downloads
Working Paper: Re-Exploring the Nexus between Monetary Policy and Banks' Risk-Taking (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-02144522

DOI: 10.1016/j.econmod.2019.01.016

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2020-10-19
Handle: RePEc:hal:journl:halshs-02144522