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An estimation of the relationship between monetary policy and bank risk-taking in Iran (in Persian)

Author

Listed:
  • Ahmadyan, Azam

    (monetary and banking research academy)

  • Rahmani, Teimor

    (tehran university)

  • Kianvand, Mehran

    (Tehran university)

Abstract

Nowadays, interest rate is considered as a direct monetary policy instrument or intermediate monetary goal. Usually, interest rates on deposits and loans are determined by monetary authorities in Iran which affect the behavior of risk-taking of banks. In this paper,we study the effects of interes rates on risk-taking of banks by using data from financial statements of banking system. Our method of estimation is panel data and our study covers the time period 2006-2015. Our index of risk-taking is the ratio of non-performing loan to total loans. Our result show that the decrease of interest rate cause the risk-taking to increasing. Also the effect of monetary policy on risk-taking depends on financial stability of banks; that is, more stable banks are able to better control risk of changing in the interest rate. On the other hand, our results imply stronger effects of interest rate on state-owned banks, compared to private banks.

Suggested Citation

  • Ahmadyan, Azam & Rahmani, Teimor & Kianvand, Mehran, 2016. "An estimation of the relationship between monetary policy and bank risk-taking in Iran (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(29), pages 405-425, October.
    • Handle: RePEc:mbr:jmbres:v:9:y:2016:i:29:p:405-425
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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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