Unconventional Monetary Policy and Bank Risk Taking

Matthys, Thomas; Meuleman, Elien; Vennet, Rudi Vander

doi:10.2139/ssrn.3211165

Cited by 4 publications

(2 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Then, the low policy interest rate and abnormal term structure have compressed the bank’s net interest profit (Borio et al, 2017; Molyneux et al, 2019). At present, unconventional monetary policy is becoming more frequent, Matthys et al (2020) use corporate syndicated loan data at the bank-firm level to analyze the bank risk-taking associated with unconventional monetary policy, showing that accommodating monetary conditions are associated with overall lower loan spreads.…”

Section: Logical Analytical Frameworkmentioning

confidence: 99%

How Does Monetary Policy Uncertainty Influence Firms’ Dynamic Adjustment of Capital Structure

Yan

2022

SAGE Open

View full text Add to dashboard Cite

This study employs high-dimensional factors model to depict the development of monetary policy uncertainty (MPU) in China over the past decades and develops a logical analytical framework to analyze the effect of MPU on the dynamic adjustment of a firm’s capital structure through bank risk-taking channels. We investigate how MPU affects dynamic adjustment of a firm’s capital structure using a panel data set of China public manufacturers between 2007 and 2018 and find that the higher the MPU, the more detrimental it is to the dynamic adjustment of firm’s capital structure. Further, bank risk-taking plays the role of a financial stabilizer. In addition to the willingness to take risks in on-balance sheet operations and the scale of loans, the risk-taking of our banks may also be reflected in the adjustment of the off-balance-sheet shadow banking scale. This study also finds that in terms of on-balance sheet business, heighten MPU decreases the scale of bank credit and tightens loan approval criteria, in terms of off-balance sheet business, heighten MPU decreases the scale of shadow banking, thereby leading to a lower dynamic adjustment of firm’s capital structure. JEL classification C13, C36, E50, G21

show abstract

Section: Logical Analytical Frameworkmentioning

confidence: 99%

How Does Monetary Policy Uncertainty Influence Firms’ Dynamic Adjustment of Capital Structure

Yan

2022

SAGE Open

View full text Add to dashboard Cite

show abstract

“…They find that low- interest rates and increased central bank liquidity through accommodative monetary policy have a nonlinear deleterious effect on bank risk. Matthys, Meuleman and Vennetb [ 9 ] used bank-firm level corporate syndicated loan data to construct a VAR model to identify bank risk-taking due to unconventional monetary policies in the U.S. from 2008 to 2015. An accommodative monetary environment was associated with overall lower loan spreads.…”

Section: Literature Reviewmentioning

confidence: 99%

Central bank communication, shadow banking, and bank risk-taking: Theoretical model and PVAR empirical evidence

2022

View full text Add to dashboard Cite

The rapid development of Chinese shadow banking, which relies on the banking system, significantly impacts nonneutral bank risk-taking. Central bank communication also plays a vital role in risk prevention and mitigation in the banking system in a modern central banking system. To address the issues of central bank communication, shadow banking, and bank risk-taking, we construct a new theoretical model that includes shadow banking based on the M-S model. Based on the central bank written communication index measured by the Monetary Policy Implementation Report 2009–2019 and balanced panel data of 35 listed banks, we design an empirical PVAR model. This study finds that central bank communication regarding domestic easing economy and policy positively affects bank risk-taking, while central bank communication and mechanism exists in China. Moreover, the growth rate of shadow banking size also positively encourages bank risk-taking. Furthermore, central bank communication regarding foreign policy is negatively related to bank risk-taking in the robustness test, supporting the above findings. The analysis of equity heterogeneity shows that the positive effect of central bank communication on bank risk-taking in shadow banking is more pronounced in small and medium-sized shareholdings. Further analyzing the economic consequences of central bank communication and shadow banking on bank risk-taking, we find that banks’ risk-taking positively affects their share of noninterest income and total asset size.

show abstract

Free Markets to Fed Markets: How Modern Monetary Policy Impacts Equity Markets

Putniņš

2022

Financial Analysts Journal

View full text Add to dashboard Cite

Unconventional Monetary Policy and Bank Risk Taking

Cited by 4 publications

References 27 publications

How Does Monetary Policy Uncertainty Influence Firms’ Dynamic Adjustment of Capital Structure

How Does Monetary Policy Uncertainty Influence Firms’ Dynamic Adjustment of Capital Structure

Central bank communication, shadow banking, and bank risk-taking: Theoretical model and PVAR empirical evidence

Free Markets to Fed Markets: How Modern Monetary Policy Impacts Equity Markets

Contact Info

Product

Resources

About