 Monetary policy, prudential policy and bank's risk-taking: a literature reviewMelchisedek Joslem Ngambou Djatche Working Papers from HAL Abstract: The pre-crisis low interest rates environment is raising concerns among researchers and policymakers about its impact on the triangle prudential policy - monetary policy - bank's risk-taking. While interest rates are set at low level for inflationary and economic growth reasons, they may lead banks to take more risk, jeopardizing the financial system and impeding the recovery. This paper provides a literature review, on the one hand, on the interaction of monetary and prudential policies through their impacts on bank's risk-taking, and on the other hand, on the issues of their coordination. Monetary policy appears to have ambiguous effects on banks' profitability, and then, on banks' risk-taking behaviour. Despite monetary and prudential policies pursue different objectives, they inevitably interact, raising challenges that face policymakers. Albeit it is argued that monetary policy alone is not sufficient to maintain macroeconomic and financial stability, and that it should be coordinated with prudential policy, the form of this coordination is not clear-cut. Keywords: Monetary policy; prudential policy; financial stability; bank’s risk-taking (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-03420209 Access Statistics for this paper More papers in Working Papers from HAL |
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