Risk-taking Channel of Monetary Policy: Evidence from Indian Banking

Sarkar, Sonali; Sensarma, Rudra

doi:10.1177/0973801018800088

Cited by 9 publications

(3 citation statements)

References 30 publications

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“…This finding support the "search for yield" behaviour of banks (Rajan, 2005). Our result is also in line with the findings of Geng et al (2016) and Sarkar and Sensarma (2019) in the Indian context.…”

Section: Variablessupporting

confidence: 92%

Does International Monetary Policy Influence the Bank Risk? Evidence From India

Shareef

Prabheesh

2022

BEMP

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This study empirically examines the impact of international monetary policy on bank risk in the Indian context. Using annual data from 64 banks and employing panel OLS and GMM techniques, this study finds that: (1) a contractionary international monetary policy increases bank risk; (2) an appreciation of the domestic exchange rate induces bank riskiness; (3) the domestic monetary policy affects bank risk through the “search for yield” channel; and (4) the international monetary policy is relatively significant in explaining the bank riskiness in the post-global financial crisis period.

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Section: Variablessupporting

confidence: 92%

Does International Monetary Policy Influence the Bank Risk? Evidence From India

Shareef

Prabheesh

2022

BEMP

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“…This study uses the interbank overnight lending rate as the proxy of monetary policy. Regarding the demonstration of monetary policy changes, changes in interest rates (Djatche, 2019;Sarkar and Sensarma, 2019) or the gap between policy rates and the natural interest rate (Altunbas et al, 2014;Özşuca and Akbostancı, 2016) are utilized. Therefore, the research process will analyze these two settings separately to explore the similarities and differences in the results obtained.…”

Section: Methodsmentioning

confidence: 99%

Bank Risk-Taking and Monetary Policy: Empirical Results for Taiwan

Kao,

Wan

2024

jeb

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Will bank risk-taking increase in response to monetary policy easing, especially when interest rates are low, and will banks increase their risk-taking in pursuit of profits? Using Z-score and non-performing loan ratio of Taiwan banking sector covered the period 2015-2020 as proxy variables for bank risk, the empirical analysis shows that there is no significant evidence to support bank risk-taking behavior in a loose monetary policy environment, implying the risk-taking channel of monetary policy not existing. However, after considering the impact of Basel III on bank capital regulations in Taiwan since 2013, bank risk-taking will increase with monetary policy easing as capital regulations become more stringent, which is consistent with the regulatory hypothesis. As for the impact of monetary regime change, banks' risk will increase with loosening monetary policy during the easing phase of monetary policy, while during monetary policy tightening stage, banks have no risk risking tendency. These inferences are valid after taking the effect of the 2008 financial crisis and considering the cross-effects of bank characteristics and monetary policy, indicating that not only banks' risk-taking is related to the strengthening of bank capital regulations, but the difference in the regime of monetary easing and tightening also affects bank risktaking behavior.

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“…At the micro level, it is mainly the borrower's factors that lead to a default on personal home mortgage loans. In the literature [24][25][26], by constructing a mortgage loan borrower default model, it was found that the borrower's job, income, family, health, and other aspects can affect the borrower's ability and willingness to repay the loan on time, causing the customer to default. The literature [27][28][29][30] considers credit risk as an important marketing variable for commercial banks' housing loan risk, which reflects the borrower's credit status and the risks associated with changes in income.…”

Section: Introductionmentioning

confidence: 99%

A Study on Risk Management of Commercial Banks’ Home Mortgage Loans Based on Risk Management Framework

Zhao

2023

Applied Mathematics and Nonlinear Sciences

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In the wave of global urbanization, the rapid development of the real estate industry has greatly driven the growth of personal housing loans of commercial banks, and personal housing loans have become a very important part of the loan business of commercial banks, especially in the business operations of many smaller urban commercial banks, where personal housing loan business is an important source of profit. However, the personal housing loan business is facing increasing risk management challenges against the multiple backgrounds of the current epidemic environment, the overall tightening of mortgage policies, and the accelerated advancement of market-based interest rates. For most urban commercial banks, personal housing loan risk control should be based on the local market, combined with the actual development of the enterprise itself, comprehensive internal and external environmental conditions to establish a perfect risk control mechanism and timely improvement of the existing management problems is a top priority. This paper takes Bank H as an example to study the risk management of personal housing loans, exploring the basic performance of Bank H in terms of personal housing loan risks, analyzing the factors affecting its housing loan risks, and the current problems in the management of personal housing loan risks. A linear regression model is also constructed to analyze the causes of Bank H’s housing loan risk, the factors affecting personal housing loan risk, and the characteristics of Bank H’s housing loan risk. The experimental results of this paper show that through risk control management of the 10 indicators selected, Bank H’s annual housing non-performing loan ratio declined by 19.392% and was effectively curbed. It is inferred that effective financial risk management decisions can be an important tool for risk management in averting the risks associated with commercial bank housing loans. Therefore, a sound post-loan risk management mechanism for personal housing loans is essential and the only way to improve the resilience of commercial banks.

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Risk-taking Channel of Monetary Policy: Evidence from Indian Banking

Cited by 9 publications

References 30 publications

Does International Monetary Policy Influence the Bank Risk? Evidence From India

Does International Monetary Policy Influence the Bank Risk? Evidence From India

Bank Risk-Taking and Monetary Policy: Empirical Results for Taiwan

A Study on Risk Management of Commercial Banks’ Home Mortgage Loans Based on Risk Management Framework

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