Volume 9, Issue 36 (Fall 2021)                   IUESA 2021, 9(36): 55-76 | Back to browse issues page

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Hajmousavi S, Mahmoudzadeh M, Adibpour M. Investigating the Effect of Monetary Policies on Banks' Risk-Taking, Cross-Country Study. IUESA. 2021; 9 (36) :55-76
URL: http://iueam.ir/article-1-1757-en.html
1- Firoozkooh Branch, Faculty of Humanities, Islamic Azad University, Firoozkooh, Iran
2- Department of Economics, Faculty of Humanities, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran , Mahmod.ma@yahoo.com
3- Department of Economics, Faculty of Humanities, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran
Abstract:   (567 Views)
In this study, the effect of monetary policy on banks' risk-taking by using the banking data of emerging economies from 2005 to 2017 with two methods of econometrics: fixed effect estimator econometrics and systematic GMM (Generalized Method of Moments System)is investigated. The results of model estimation show that the effect of monetary policy indicators on banks' risk-taking is positive and significant in all regressions. When central banks reduce interest rates with the goal of expansionary monetary policy, They increase the riskiness of banks and as interest rates fall, Banking risk increases. The results show that foreign and state-owned banks are more risky than domestic private banks due to political interference or implicit government support. Also, increasing the growth rate of GDP increases financial stability and reduces banking risk. The impact of favorable external economic shocks also increases financial stability, and as foreign markets grow, banks in emerging economies can benefit from financing companies that are affiliated with foreign markets, and banking risk is reduced.
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Type of Study: Research | Subject: Special
Received: 2021/05/25 | Accepted: 2021/08/22 | Published: 2021/12/6 | ePublished: 2021/12/6

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