Thursday, February 20, 2014

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[IWS] ADB: CAN LOW INTEREST RATES BE HARMFUL?: AN ASSESSMENT OF THE BANK RISK-TAKING CHANNEL IN ASIA [online 20 February 2014]

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Description

Asian Development Bank (ADB)

ADB Working Paper Series on Regional Economic Integration

No. 123 | January 2014

 

CAN LOW INTEREST RATES BE HARMFUL?: AN ASSESSMENT OF THE BANK RISK-TAKING CHANNEL IN ASIA [online 20 February 2014]

by  Ramayandi, Arief; Rawat, Umang; Tang, Hsiao Chink 

http://www.adb.org/publications/can-low-interest-rates-be-harmful-assessment-bank-risk-taking-channel-asia

or
http://www.adb.org/sites/default/files/pub/2014/reiwp-123-can-low-interest-rates-harmful.pdf
[full-text, 52 pages]

 

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.

 

Contents

• Abstract

• Introduction

• Literature: Theory and Evidence

• Model Specification

• Data and Estimation Issues

• Results

• Conclusion

• References

• Appendix

 

 

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