Bank Leverage and Monetary Policy's Risk-Taking Channel: Evidence from the United States

We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on banks' internal ratings on loans to businesses over the period 1997 to 2011 from the Federal Reserve's Survey of Terms of Business Lending. We find that ex ante risk-tak...

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Veröffentlicht in:	The Journal of finance (New York) 2017-04, Vol.72 (2), p.613-654
Hauptverfasser:	DELL'ARICCIA, GIOVANNI, LAEVEN, LUC, SUAREZ, GUSTAVO A.
Format:	Artikel
Sprache:	eng
Schlagworte:	Bank loans Banking industry Credit ratings Leveragte Monetary policy United States
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container_end_page	654
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container_title	The Journal of finance (New York)
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creator	DELL'ARICCIA, GIOVANNI LAEVEN, LUC SUAREZ, GUSTAVO A.
description	We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on banks' internal ratings on loans to businesses over the period 1997 to 2011 from the Federal Reserve's Survey of Terms of Business Lending. We find that ex ante risk-taking by banks (measured by the risk rating of new loans) is negatively associated with increases in short-term interest rates. This relationship is more pronounced in regions that are less in sync with the nationwide business cycle, and less pronounced for banks with relatively low capital or during periods of financial distress.
doi_str_mv	10.1111/jofi.12467
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subjects	Bank loans Banking industry Credit ratings Leveragte Monetary policy United States
title	Bank Leverage and Monetary Policy's Risk-Taking Channel: Evidence from the United States
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