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Industry Heterogeneity in the Risk-Taking Channel

Manthos Delis (), Maria Iosifidi and Nikolaos Mylonidis ()

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the transmission of the risk-taking channel to different industries using syndicated loans to U.S. borrowers from 1984 to 2018. We find that a one percentage point decrease in the shadow rate increases loan spreads by more than 30 basis points in the mining & construction and manufacturing sectors. The equivalent effect is lower in the services and trade industries, whereas the effect on the transportation & utilities and finance industries is less pronounced. Our results survive in several sensitivity tests and are immune to time-varying demand-side explanations. The identified differences in the potency of the risk-taking channel explain a significant part of the inferior performance of highly affected sectors compared to less-affected sectors in the year after a loan origination.

Keywords: Bank risk-taking; Monetary policy; U.S.; Syndicated loans; Different industries (search for similar items in EconPapers)
JEL-codes: E43 E52 G01 G21 (search for similar items in EconPapers)
Date: 2020-05-16
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
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