The Risk-Taking Channel and Monetary Transmission Mechanism in Colombia
The 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.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (57-1) 3431111
Fax: (57-1) 2841686
Web page: http://www.banrep.org/publicaciones/pub_borra.htm
More information through EDIRC
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.:
- Altunbas, Yener & Gambacorta, Leonardo & Marqués-Ibáñez, David, 2010.
"Does monetary policy affect bank risk-taking?,"
Working Paper Series
1166, European Central Bank.
- Yener Altunbas & Leonardo Gambacorta & David Marquï¿½s-Ibï¿½ï¿½ez, 2009.
"Bank risk and monetary policy,"
Temi di discussione (Economic working papers)
712, Bank of Italy, Economic Research and International Relations Area.
When requesting a correction, please mention this item's handle: RePEc:bdr:borrec:616. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Clorith Angélica Bahos Olivera)
If references are entirely missing, you can add them using this form.