Monetary Policy and Bank Excessive Risk-Taking

The aim of this paper is to investigate the relationship between monetary policy and bank excessive risk-taking for a panel of 22 countries over the period 1990- 2014. The sample covers countries from Latin America, OECD and South East Asia. By performing panel cointegration and panel GMM models, re...

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Bibliographic Details
Published inActa Universitatis Danubius. Œconomica Vol. 13; no. 2; pp. 157 - 173
Main Authors Zaghdoudi, Taha, Maktouf, Samir
Format Journal Article
LanguageEnglish
Published Danubius University Press 2017
Editura Universitară Danubius
Subjects
Economy
panel GMM
fully modified ols
nonperforming loans
Monetary policy
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Summary:The aim of this paper is to investigate the relationship between monetary policy and bank excessive risk-taking for a panel of 22 countries over the period 1990- 2014. The sample covers countries from Latin America, OECD and South East Asia. By performing panel cointegration and panel GMM models, results indicate that the adoption of an expansionary monetary policy through high money supply and low interest rates increases non-performing loans. However, a restrictive monetary policy with high interest rates attracts riskier investors.
ISSN:2065-0175
2067-340X