The effects of the interest rates on bank risk in China

Geng, Zhongyuan; Grivoyannis, Elias C.; Zhang, Shuran; He, Yi

doi:10.1177/1847979016662617

Cited by 19 publications

(30 citation statements)

References 22 publications

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“…As a result, reduction of interest rates would decrease banks' incentives to take risks and improve banks' creditworthiness. Geng et al (2016) provide similar evidence for Chinese banks. For the authors in the presence of low rates, banks would not want to commit to taking more risks.…”

Section: On Bank Risk-takingsupporting

confidence: 54%

Negative Interest Rates, Bank Profitability and Risk-taking

Boungou

2019

SSRN Journal

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Using a panel dataset of 2442 banks operating in the 28 EU countries over the period from 2011 to 2017, this paper aims to assess the impact of negative interest rates on banks" profitability and risk-taking. Using dynamic panel models, we find that the effect of negative interest rates on banks' margins is stronger compared to an environment of positive rates. We notice that negative rates have squeezed banks' net interest margins. We also find that banks have offset the effects on margins by increasing non-interest income. Furthermore, negative interest rates contributed to a reduction in banks' risk-taking. Finally, we note that the effects of negative rates on profitability and risk-taking differ among banks, depending on their specific balance sheet characteristics.

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Section: On Bank Risk-takingsupporting

confidence: 54%

Negative Interest Rates, Bank Profitability and Risk-taking

Boungou

2019

SSRN Journal

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“…Bank-level lending rate (bllr) is found to be negatively and significantly associated to risk-taking (npltl & lnzscore) of Bangladeshi commercial banks, indicating a higher amount of loans generate more interest income which leads to lower the bank risk; the results supported by the study of Geng et al (2016).…”

Section: The Impacts Of Capital Regulations On Bank Risk-takingmentioning

confidence: 71%

Do Capital Regulations and Risk-Taking Behavior Affect Bank Performance? Evidence from Bangladesh

Akter¹,

Majumder

Uddin

2018

Asian Economic and Financial Review

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This study develops and estimates a dynamic panel model to examine the simultaneous relationship between capital regulations and bank risk-taking in the Bangladeshi banking sector. Furthermore, the study investigates the impact of capital regulations and bank risk-taking on performance. The study investigates on 30 commercial banks of Bangladesh over the period 2002-2016 using two-step system GMM estimator. The study also uses two-stage least squares regression to check the robustness of the findings. The empirical evidence is found showing the significant negative association between capital regulations and risk-taking simultaneously. The study also finds evidence that there is a significant positive impact of capital regulations on bank performance. In contrast, the findings show that bank risk-taking has significant negative impacts on performance. The study expects that the results of this study will add value to the existing literature and will be significant for the future researcher and policymaker to decide in this regard. Contribution/ Originality:This study contributes to the existing literature by investigating the simultaneous relationship between capital regulations and bank risk-taking on the emerging economy like Bangladesh. The study further examines the impact of capital regulations and bank risk-taking on performance. The study empirically uses dynamic panel model with two-step system GMM estimator which provides consistent results by overcoming the issue of endogeneity, serial correlation, and heteroscedasticity.

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“…This study uses a bank lending interest rate variable in the risk equation. Geng et al (2016) examine the effects of the interest rates on bank risk in China by using the ratio of interest income to total loans as a measure of lending interest rate. Their findings indicate the lower level of bank lending interest shows lower interest income from loans, which causes reduction of bank earnings.…”

Section: Bank Risk and Performancementioning

confidence: 99%

Bank risk and performance in an emerging market setting: the case of Bangladesh

Majumder

2018

JEFAS

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Purpose This study aims to investigate the impacts of bank capital requirements on the performance and risk of the emerging economy, i.e. Bangladeshi banking sector. Design/methodology/approach The study applies an unbalanced panel data which comprises 30 banks yielding a total of 413 bank-year observations over the period 2000 to 2015. Findings Using generalized methods of moments, the empirical results of this research reveal that bank capital is positively and significantly impressive on bank performance, whereas negatively and significantly impact on risk. The study also finds the inverse relationship between risk and performance in both the performance and risk equations. The results also indicate that there is a persistence of performance and risk from one year to the next year. Originality/value This is the unique investigation on Bangladeshi bank industry that considers the simultaneous effect of bank capital requirements on risk and performance. Therefore, it is predicted that the empirical evidence of this research shows policy implications to the regulatory authority of Bangladeshi banking industry to determine relevant policies.

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The effects of the interest rates on bank risk in China

Cited by 19 publications

References 22 publications

Negative Interest Rates, Bank Profitability and Risk-taking

Negative Interest Rates, Bank Profitability and Risk-taking

Do Capital Regulations and Risk-Taking Behavior Affect Bank Performance? Evidence from Bangladesh

Bank risk and performance in an emerging market setting: the case of Bangladesh

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