Bank risk-taking and impaired monetary policy transmission

Philipp Koenig; Eva Schliephake

doi:10.2139/ssrn.3925073

Bank risk-taking and impaired monetary policy transmission

Philipp Koenig
, Eva Schliephake

Research output: Working paper › Preprint

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Abstract

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.<br>

Original language	English
Number of pages	42
DOIs	https://doi.org/10.2139/ssrn.3925073
Publication status	Published - 20 Sept 2021

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 10 Reduced Inequalities
SDG 17 Partnerships for the Goals

Keywords

Monetary policy
Bank lending
Risk-taking channel
Reversal rate

Access to Document

10.2139/ssrn.3925073Licence: Unspecified

39834641Final published version, 447 KBLicence: Unspecified

http://hdl.handle.net/10400.14/36172Licence: Unspecified

Policy, credit market, and distributional effects
Cerqueiro, G. (PI), Schliephake, E. (CoPI), Bonfim, D. (Researcher), Stahl, J. (PI) & Panetti, E. (Researcher)
Fundação para a Ciência e a Tecnologia
1/01/21 → 31/12/23
Project: Research
CUBE: Católica Lisbon Research Unit in Business and Economics
Machado, F. (PI), Aranda, A. M. (Researcher), Costa, A. I. D. A. (Researcher), Martins, A. P. (Researcher), Bernard, A. (Researcher), Fidalgo, A. (Researcher), Reis, C. (Researcher), Abecassis-Moedas, C. (Researcher), Santos, C. (Researcher), Tran, D. (Researcher), Fernandes, D. (Researcher), Bonfim, D. (Researcher), Schliephake, E. (Researcher), Kalogirou, F. (Researcher), Reis, F. (Researcher), Santos, F. (Researcher), Machado, F. (Researcher), Sguera, F. (Researcher), Cerqueiro, G. (Researcher), Reis, H. (Researcher), Barreto, I. (Researcher), Silva, J. (Researcher), Salvado, J. C. (Researcher), Neves, J. C. D. (Researcher), Gijsbrechts, J. (Researcher), Stahl, J. (Researcher), Guedes, J. C. (Researcher), Faias, J. (Researcher), Wagner, L. (Researcher), Correia, I. (Researcher), Saldanha, M. F. (Researcher), Fontes, J. C. (Researcher), Modesto, L. (Researcher), Meira, M. (Researcher), Matos, M. G. D. (Researcher), Gouveia, M. (Researcher), Kozeniauskas, N. (Researcher), Bertani, N. (Researcher), Couzoff, P. (Researcher), Barroso, P. (Researcher), Encarnação, P. (Researcher), Raposo, P. (Researcher), Teles, P. (Researcher), Bastos, W. (Researcher), Bohnsack, R. (Researcher), Vale, R. C. D. (Researcher), Ferreira, R. (Researcher), Lloyd-Braga, T. (Researcher), Ramus, T. (Researcher), Colaço, V. H. (Researcher), Cavicchini, A. (Researcher), Parada, P. (Researcher), Pieters, R. (Researcher), Pinto, F. S. (Researcher), Colaço, V. H. (Researcher) & Venter, Z. (Researcher)
1/01/20 → 31/12/25
Project: Research

Bank risk-taking and impaired monetary policy transmission
Koenig, P. J. & Schliephake, E., Jul 2024, In: International Journal of Central Banking. 20, 3, p. 257-302 46 p.
Research output: Contribution to journal › Article › peer-review

Open Access
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Cite this

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Bank risk-taking and impaired monetary policy transmission

Abstract

UN SDGs

Keywords

Access to Document

Fingerprint

Projects

Policy, credit market, and distributional effects

CUBE: Católica Lisbon Research Unit in Business and Economics

Research output

Bank risk-taking and impaired monetary policy transmission

Cite this