Reserves and Risk: Evidence from China

Rasmus Fatum, Takahiro Hattori and Yohei Yamamoto

No HIAS-E-98, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: China holds more international reserves than any other country. We consider if the Chinese accumulation of reserves is associated with unintended consequences in the form of increased private sector risk taking. Using sovereign credit default swap spreads and stock index prices as indicators of risk taking we provide evidence to suggest that as reserve holdings increase, so does the willingness of the private sector to take on more risk. This is an important finding that adds credence to the suggestion that insurance through costly reserves, to be used in the event of a crisis, may lead to private sector actions that in and of themselves make it more likely that this insurance will be used.

Keywords: International reserves; risk taking; China (search for similar items in EconPapers)
JEL-codes: F31 G15 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2020-05
New Economics Papers: this item is included in nep-cna and nep-ias
Note: This version: 15 May 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/31199/070_hiasDP-E-98.pdf

Related works:
Journal Article: Reserves and risk: Evidence from China (2023)
Working Paper: Reserves and Risk: Evidence from China (2020)
Working Paper: Reserves and Risk: Evidence from China (2020)
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:hit:hiasdp:hias-e-98

Access Statistics for this paper

More papers in Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Digital Resources Section, Hitotsubashi University Library ().