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Does Macroprudential Policy Reduce Bank Risk-Taking?

In: Proceedings of the 10th Annual Meeting of Risk Analysis Council of China Association for Disaster Prevention (RAC 2022)

Author

Listed:
  • Yongkui Li

    (Southwest University of Political Science & Law, School of Economics)

  • Qixuan Du

    (Southwest University of Political Science & Law, School of Economics)

  • Jinli Liu

    (Southwest University of Political Science & Law, School of Economics)

Abstract

ABSTRACT Based on the unbalanced panel data of 141 commercial banks in China from 2008 to 2020, this paper uses difference‐in‐differences models to study the impact of macroprudential policies on banks' risk-taking. The empirical results show that China's implementation of macro-prudential policies can effectively improve the effect of bank risk prevention. Further heterogeneity analysis found that, compared with banks with lower capital adequacy ratios, macro-prudential policies had a more significant impact on the risk-taking behavior of commercial banks with higher capital adequacy ratios. Commercial banks with higher operating efficiency implement macro-prudential policies based on higher capital regulatory requirements, which have a more significant effect on their risk-taking. Based on the research conclusions, this paper puts forward relevant policy recommendations to strengthen the supervision of bank capital in a differentiated way.

Suggested Citation

  • Yongkui Li & Qixuan Du & Jinli Liu, 2023. "Does Macroprudential Policy Reduce Bank Risk-Taking?," Advances in Economics, Business and Management Research, in: Sen Qiao & Hongbin Cao & Aiwen Liu & Xueliang Chen & Tiefei Li (ed.), Proceedings of the 10th Annual Meeting of Risk Analysis Council of China Association for Disaster Prevention (RAC 2022), pages 323-329, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-194-4_45
    DOI: 10.2991/978-94-6463-194-4_45
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