Can Low Interest Rates be Harmful: An Assessment of the Bank Risk-Taking Channel in Asia

Ramayandi, Arief; Rawat, Umang; Tang, Hsiao Chink | January 2014
Abstract
Events surrounding the global financial crisis have brought to light the potential role of monetary policy in precipitating the crisis. Numerous studies on advanced economies have documented a significant negative relationship between interest rates and bank risk-taking. This paper also finds the presence of the risk-taking channel based on a panel of publicly listed bank data in Asia. Using both annual and quarterly data, ―too low‖ interest rates are found to lead to an increase in bank risk-taking.
Citation
Ramayandi, Arief; Rawat, Umang; Tang, Hsiao Chink. 2014. Can Low Interest Rates be Harmful: An Assessment of the Bank Risk-Taking Channel in Asia. © Asian Development Bank. http://hdl.handle.net/11540/4188. License: CC BY 3.0 IGO.
Keywords
Economic Crisis
Economic Efficiency
Economic Policies
Regional Economic Development
Job Evaluation
Evaluation
Crisis
Unemployment
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Citable URI
http://hdl.handle.net/11540/4188
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