Bank risk-taking and impaired monetary policy transmission

Bibliographic Details
Main Author: Koenig, Philipp
Publication Date: 2021
Other Authors: Schliephake, Eva
Format: Article
Language: eng
Source: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
Download full: http://hdl.handle.net/10400.14/36172
Summary: We consider a standard banking model with agency frictions to simultaneously study the weakening and reversal of monetary transmission and banks’ risk-taking in a low-interest environment. Both, weaker monetary transmission and higher risk-taking arise because lower policy rates impair banks’ net worth.The pass-through to deposit rates, the level of excess reserves and the extent of the agency problem between banks and depositors are crucial determinants of monetary transmission. If the deposit pass-through is sufficiently impaired, a reversal rate exists. For policy rates below the reversal rate further interest rate reductions lead to a disproportionate increase in risk-taking and a contraction in loan supply.
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spelling Bank risk-taking and impaired monetary policy transmissionMonetary policyBank lendingRisk-taking channelReversal rateWe consider a standard banking model with agency frictions to simultaneously study the weakening and reversal of monetary transmission and banks’ risk-taking in a low-interest environment. Both, weaker monetary transmission and higher risk-taking arise because lower policy rates impair banks’ net worth.The pass-through to deposit rates, the level of excess reserves and the extent of the agency problem between banks and depositors are crucial determinants of monetary transmission. If the deposit pass-through is sufficiently impaired, a reversal rate exists. For policy rates below the reversal rate further interest rate reductions lead to a disproportionate increase in risk-taking and a contraction in loan supply.VeritatiKoenig, PhilippSchliephake, Eva2021-12-13T16:19:31Z2021-09-202021-09-20T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.14/36172eng10.2139/ssrn.3925073info:eu-repo/semantics/openAccessreponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiainstacron:RCAAP2025-03-13T12:23:00Zoai:repositorio.ucp.pt:10400.14/36172Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireinfo@rcaap.ptopendoar:https://opendoar.ac.uk/repository/71602025-05-29T01:48:29.343375Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiafalse
dc.title.none.fl_str_mv Bank risk-taking and impaired monetary policy transmission
title Bank risk-taking and impaired monetary policy transmission
spellingShingle Bank risk-taking and impaired monetary policy transmission
Koenig, Philipp
Monetary policy
Bank lending
Risk-taking channel
Reversal rate
title_short Bank risk-taking and impaired monetary policy transmission
title_full Bank risk-taking and impaired monetary policy transmission
title_fullStr Bank risk-taking and impaired monetary policy transmission
title_full_unstemmed Bank risk-taking and impaired monetary policy transmission
title_sort Bank risk-taking and impaired monetary policy transmission
author Koenig, Philipp
author_facet Koenig, Philipp
Schliephake, Eva
author_role author
author2 Schliephake, Eva
author2_role author
dc.contributor.none.fl_str_mv Veritati
dc.contributor.author.fl_str_mv Koenig, Philipp
Schliephake, Eva
dc.subject.por.fl_str_mv Monetary policy
Bank lending
Risk-taking channel
Reversal rate
topic Monetary policy
Bank lending
Risk-taking channel
Reversal rate
description We consider a standard banking model with agency frictions to simultaneously study the weakening and reversal of monetary transmission and banks’ risk-taking in a low-interest environment. Both, weaker monetary transmission and higher risk-taking arise because lower policy rates impair banks’ net worth.The pass-through to deposit rates, the level of excess reserves and the extent of the agency problem between banks and depositors are crucial determinants of monetary transmission. If the deposit pass-through is sufficiently impaired, a reversal rate exists. For policy rates below the reversal rate further interest rate reductions lead to a disproportionate increase in risk-taking and a contraction in loan supply.
publishDate 2021
dc.date.none.fl_str_mv 2021-12-13T16:19:31Z
2021-09-20
2021-09-20T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.14/36172
url http://hdl.handle.net/10400.14/36172
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv 10.2139/ssrn.3925073
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
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dc.source.none.fl_str_mv reponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
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instname_str FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
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repository.name.fl_str_mv Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
repository.mail.fl_str_mv info@rcaap.pt
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