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Does Prolonged Monetary Policy Easing Increase Financial Vulnerability?

Using firm-level data for approximately 1,000 bank and nonbank financial institutions in 22 countries over the past 15 years we study the impact of prolonged monetary policy easing on risk-taking behavior. We find that the leverage ratio, as well as other measures of firm-level vulnerability, increa...

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Bibliographic Details
Main Author: Cecchetti, Stephen
Other Authors: Mancini-Griffoli, Tommaso, Narita, Machiko
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2017
Series:IMF Working Papers
Subjects:
Banks
Finance
Accommodative Monetary Policy
Banks And Banking
Financial Sector Policy And Analysis
Investment Banking
Financial Services
Bond Yields
Mortgages
International Financial Markets
Bonds
Financial Risk Management
Capital And Ownership Structure
Goodwill
Asset-liability Management
Banking
Brokerage
Financial Risk And Risk Management
Venture Capital
Financing Policy
Depository Institutions
Institutional Investors
Pension Funds
Monetary Economics
Financial Institutions
Financial Instruments
Value Of Firms
General Financial Markets: Government Policy And Regulation
Micro Finance Institutions
General Financial Markets: General (includes Measurement And Data)
Investments: Bonds
Asset And Liability Management
Non-bank Financial Institutions
Asset Management
Ratings And Ratings Agencies
Financial Markets And The Macroeconomy
Financial Sector Risk
Monetary Policy
Investment & Securities
Money And Monetary Policy
Finance: General
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Using firm-level data for approximately 1,000 bank and nonbank financial institutions in 22 countries over the past 15 years we study the impact of prolonged monetary policy easing on risk-taking behavior. We find that the leverage ratio, as well as other measures of firm-level vulnerability, increases for banks and nonbanks as domestic monetary policy easing persists. Cross-border effects are also notable. We find effects of roughly similar magnitude on foreign financial sector firms when the U.S. eases policy. Results appear robust to a variety of specifications, and to be non-linear, with risk-taking behavior rising most quickly at the onset of monetary policy easing
Physical Description:31 pages
ISBN:9781475588644

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