The Risk-Taking Channel and Monetary Transmission Mechanism in Colombia
AbstractThe recent financial crisis has brought to the forefront the need of a better understanding of the transmission mechanisms of monetary policy. The main step forward in this direction has drawn on work aimed at stressing the role of the financial sector in this transmission. Particular emphasis has been place on how policy actions impact risk perceptions and attitudes of banks and other financial institutions, leading to shifts in the supply of credit. Along these lines, and based on evidence from Colombia, the present paper finds a significant link between low interest rates and banks’ risk taking based on evidence from Colombia. Lower interest rates raise the probability of default on new loans but reduce that on outstanding loans. Furthermore, this channel of policy transmission depends on some bank, loan and borrower characteristics, as well on macroeconomic conditions such as the rate of growth of the economy.
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Bibliographic InfoPaper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 616.
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Monetary policy; lending standards; risk taking; duration analysis; accelerated failure time models. Classification JEL: E44; G21; L14;
Other versions of this item:
- Martha López & Fernando Tenjo & Héctor Zárate, 2011. "The Risk-Taking ChHannel and Monetary Transmission Mechanism in Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ioannidou, V. & Ongena, S. & Peydro, J.L., 2009. "Monetary Policy, Risk-Taking, and Pricing: Evidence from a Quasi-Natural Experiment," Discussion Paper 2009-31 S, Tilburg University, Center for Economic Research.
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"Bank risk and monetary policy,"
Working Paper Series
1075, European Central Bank.
- Yener Altunbas & Leonardo Gambacorta & David Marques-Ibanez, 2010.
"Does monetary policy affect bank risk-taking?,"
BIS Working Papers
298, Bank for International Settlements.
- Martha López & Fernando Tenjo & Héctor Zárate, 2012.
"The Risk-Taking Channel in Colombia Revisited,"
BORRADORES DE ECONOMIA
009313, BANCO DE LA REPÚBLICA.
- Ekin Ayse Ozsuca & Elif Akbostanci, 2012. "An Empirical Analysis of the Risk Taking Channel of Monetary Policy in Turkey," ERC Working Papers 1208, ERC - Economic Research Center, Middle East Technical University, revised Dec 2012.
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