Cover IMF Staff Position Notes
Monetary Policy and Bank Risk-Taking
Author:
Mr. Giovanni Dell'Ariccia
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,
Mr. Gianni De Nicolo
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Mr. Luc Laeven
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Mr. Fabian Valencia
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Series:
IMF Staff Position Notes
Volume/Issue:
Volume 2010: Issue 009
Language:
English
Publication Date:
27 Jul 2010
DOI:
https://doi.org/10.5089/9781455253234.004
ISBN:
9781455253234
ISSN:
2617-6742
Pages:
22
Keywords:
SPN; bank risk; bank equity; franchise value; leverage ratio; bank Risk Taking; leveraged bank
Legal-disclaimer:
The views expressed herein are those of the author(s) and should not be attributed to the IMF, its Executive Board, or its management.
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This paper contributes to the current debate on what role financial stability considerations should play in monetary policy decision and how best to integrate macro-prudential and monetary policy frameworks. The paper broadly supports the view that monetary policy easing induces greater risk-taking by banks but also shows that the relationship between real interest rates and banking risk is more complex. Ultimately, it depends on how much skin in the game banks have. The central message of the paper is broadly complementary to those in the recent MCM board paper “Central Banking Lessons from the Crisis.”
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Cover IMF Staff Position Notes
IMF Staff Position Notes
ISSN:
2617-6742
Publisher:
International Monetary Fund
Volume 2010: Issue 009