Financial stability and monetary policy -The case of Brazil

Tabak, Benjamin Miranda; Laiz, Marcela Tetzner; Cajueiro, Daniel O.

doi:10.1590/s0034-71402013000400003

Cited by 23 publications

(25 citation statements)

References 34 publications

(28 reference statements)

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“…From the foregoing review, it is evident that there is dearth of studies in this area especially in a developing sub-Sahara African country such as Nigeria. Most of the studies like Graeve et al (2008), Granville and Mallick (2009), Tabak et al (2010), Ngakosso (2016, etc were not localized to Nigeria. Besides, they focused mainly on individual banks (micro) rather than the banking industry as a whole (macro).…”

Section: Empirical Literaturementioning

confidence: 99%

Monetary Policy and Financial Stability in the Nigerian Banking Industry

Chukwudi¹,

Henry²

2019

IJFR

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This study examined the impact of monetary policy on financial stability in the Nigerian banking industry for the period 2008Q1 to 2016Q2, using an error correction model. Banking industry financial stability index (BIFSI) was computed within the study and was used as a measure of financial stability in the Nigerian banking industry. The study discovered that the impact of monetary policy on financial stability in the Nigerian banking industry was weak. It also revealed a significant long run equilibrium relationship between monetary policy and financial stability in the Nigerian banking industry with a speed of adjustment to long run equilibrium of 66.54%. It was concluded that open market operation and exchange rate channels are more effective channels of transmitting monetary policy to financial stability in the banking industry, than interest rate channel.

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Section: Empirical Literaturementioning

confidence: 99%

Monetary Policy and Financial Stability in the Nigerian Banking Industry

Chukwudi¹,

Henry²

2019

IJFR

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“…YEAR is a time dummy variable. Taking into account the relatively small sample period, only the first lag of dependent variable is considered, and this is in line with prior studies (see Altunbas et al, 2010;Tabak et al, 2010). 'System' GMM (SGMM) estimator is used to estimate the model because ordinary least squares estimator (OLS) is biased in dynamic models.…”

Section: Summary Statisticsmentioning

confidence: 84%

“…The Chinese monetary policy is argued to be more enforceable to Chinese state-owned banks compared to non-state-owned banks (Geiger, 2008). Prior studies also point out that foreign banks can seek for fund support from home banks and become less affected by monetary policy shock (Ahtik, 2012;Tabak et al, 2010). We control for ownership effect by including OWNERSHIP dummy which has the value of 1 for state-owned banks, 2 for non-state-owned banks and 3 for foreign banks.…”

Section: Summary Statisticsmentioning

confidence: 99%

An analysis of involuntary excess reserves, monetary policy and risk-taking behaviour of Chinese Banks

Nguyen

Boateng

2015

International Review of Financial Analysis

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In this paper, we examine the effects of monetary policy on the risk-taking behaviour of Chinese banks in the presence of involuntary excess reserves based on a sample of 95 banks. We find that involuntary excess reserves lead to more aggressive risk-taking suggesting that large involuntary excess reserves stimulate the rapid expansion of credit and the price bubble in the Chinese financial market. However, banks with larger involuntary excess reserves tend to reduce risk-taking more rapidly under the tightening monetary policy regime. The paper sheds light on the effectiveness of government monetary policy in reducing the risk-taking behaviour of banks in an emerging market where involuntary excess reserves are present.

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“…Notably, most of the existing empirical literature on the risk-taking channel provide evidence for the US and Euro area, whereas very few studies provide evidence for emerging markets. Specifically, these are Ioannidou et al (2009) for Bolivia, Tabak et al (2010) for Brazil and Lopez et al (2010Lopez et al ( , 2012 for Colombia and all of them present empirical evidence on the existence of such a channel. None of the empirical studies have been published so far have specifically examined the risk-taking channel in Turkey.…”

Section: Empirical Evidence On the Risk-taking Channelmentioning

confidence: 96%

An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey

Özşuca¹,

Akbostancı

2015

Emerging Markets Finance and Trade

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The mechanism by which monetary policy affects financial institutions' risk perception and/or tolerance has been called the 'risk-taking channel' of monetary policy. It has been recently argued that periods of low interest rates due to expansionary monetary policy, might induce an increase in bank risk-appetite and risk-taking behavior. This paper investigates the bank specific characteristics of risk-taking behavior of the Turkish banking sector as well as the existence of risk taking channel of monetary policy in Turkey. Using bank level quarterly data over the period 2002-2012 a dynamic panel model is estimated. Our sample accounts for 53 banks that have been active in Turkey during the period. To deal with the potential endogeneity between risk and bank specific characteristics, which are explanatory variables in our model, the GMM estimator proposed by Arellano and Bover (1995) and Blundell and Bond (1998) is used. Four alternative risk measures are used in the analysis; three accountingbased risk indicators and a market-based indicator-Expected Default Frequency. We find evidence that low levels of interest rates have a positive impact on banks' risk-taking behavior for all the risk measures. Specifically, low short term interest rates reduce the risk of outstanding loans; however short term interest rates below a theoretical benchmark increase risk-taking of banks. This result holds for macroeconomic controls as well. Furthermore, in terms of bank specific characteristics, our analysis suggests that large, liquid and wellcapitalized banks are less prone to risk-taking.

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Financial stability and monetary policy -The case of Brazil

Cited by 23 publications

References 34 publications

Monetary Policy and Financial Stability in the Nigerian Banking Industry

Monetary Policy and Financial Stability in the Nigerian Banking Industry

An analysis of involuntary excess reserves, monetary policy and risk-taking behaviour of Chinese Banks

An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey

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