What is it about?
This paper addresses the impact of bank liquidity on risk-taking behaviour of Chinese banks, and provides evidence for a risk-taking channel of monetary policy operating through bank liquidity. By using bank-level panel data from 123 Chinese commercial banks during 2003–2018, it is found that banks facing lower liquidity risk will be encouraged to take more risk. Moreover, loose monetary policy leads to more aggressive risk-taking by reducing the bank liquidity risk, namely a liquidity risk-taking channel of monetary policy. These findings suggest that authorities should give full consideration to the influence of the monetary policy on bank risk-taking through bank liquidity channels.
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Why is it important?
We provide evidence for a risk-taking channel of monetary policy operating through bank liquidity.
Perspectives
We provide evidence for a risk-taking channel of monetary policy operating through bank liquidity.
Lihuan Zhuang
Jinan University
Read the Original
This page is a summary of: Bank liquidity and the risk-taking channel of monetary policy: An empirical study of the banking system in China, PLoS ONE, December 2022, PLOS,
DOI: 10.1371/journal.pone.0279506.
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