IDEAS home Printed from https://ideas.repec.org/p/bdr/borrec/690.html
   My bibliography  Save this paper

The Risk-Taking Channel in Colombia Revisited

Author

Listed:
  • Martha López

    ()

  • Fernando Tenjo

    ()

  • Héctor Zárate

    ()

Abstract

Levels of interest rates below historical norms may have enhanced financial instability in developed and developing economies during the 2000's. The risk taking channel of monetary policy transmission is a recent theory that explains the interaction between risk perceptions of the financial system and monetary policy. This paper presents empirical evidence of the risk taking channel of monetary policy using detailed information on consumer and commercial loans from the Colombian banking system. Using probit and duration models we find that the banking system takes on more risk when the level of interest rates are too low. We also find that the response to interest rates is higher in the case of commercial loans.

Suggested Citation

  • Martha López & Fernando Tenjo & Héctor Zárate, 2012. "The Risk-Taking Channel in Colombia Revisited," Borradores de Economia 690, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:690
    as

    Download full text from publisher

    File URL: http://repositorio.banrep.gov.co/bitstream/handle/20.500.12134/5707/be_690.pdf?sequence=1&isAllowed=y
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Leonardo Gambacorta, 2009. "Monetary policy and the risk-taking channel," BIS Quarterly Review, Bank for International Settlements, December.
    2. Eliana González & Luis F. Melo & Luis E. Rojas & Brayan Rojas, 2011. "Estimations of the Natural Rate of Interest in Colombia," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 33-75, January-J.
    3. Piti Disyatat, 2011. "The Bank Lending Channel Revisited," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(4), pages 711-734, June.
    4. Martha López & Fernando Tenjo & Héctor Zárate, 2011. "The Risk-Taking Channel and Monetary Transmission Mechanism in Colombia," Revista ESPE - ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 29(64), pages 211-234, July.
    5. Gabriel Jiménez & Steven Ongena & José‐Luis Peydró & Jesús Saurina, 2014. "Hazardous Times for Monetary Policy: What Do Twenty‐Three Million Bank Loans Say About the Effects of Monetary Policy on Credit Risk‐Taking?," Econometrica, Econometric Society, vol. 82(2), pages 463-505, March.
    6. Douglas W. Diamond & Raghuram G. Rajan, 2006. "Money in a Theory of Banking," American Economic Review, American Economic Association, vol. 96(1), pages 30-53, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:bdr:bdrcap:2013-09-645-674 is not listed on IDEAS
    2. Martha López & Fernando Tenjo Galarza & Hector Zárate, 2014. "Credit Cycles, Credit Risk and Countercyclical Loan Provisions," Revista ESPE - ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 32(74), pages 9-17, June.
    3. Ongena, Steven & Tümer-Alkan, Günseli & von Westernhagen, Natalja, 2015. "Do exposures to sagging real estate, subprime or conduits abroad lead to contraction and flight to quality in bank lending at home?," Discussion Papers 09/2015, Deutsche Bundesbank.
    4. Gabriel Jiménez & Steven Ongena & José‐Luis Peydró & Jesús Saurina, 2014. "Hazardous Times for Monetary Policy: What Do Twenty‐Three Million Bank Loans Say About the Effects of Monetary Policy on Credit Risk‐Taking?," Econometrica, Econometric Society, vol. 82(2), pages 463-505, March.
    5. Fernando Tenjo Galarza & Enrique López Enciso & Héctor Zárate Solano, 2015. "Riesgo de crédito y la transmisión de la política monetaria en Colombia," BORRADORES DE ECONOMIA 012616, BANCO DE LA REPÚBLICA.
    6. Martha López, 2017. "Economic Sectors and the Risk-taking Channel of Monetary Policy," Borradores de Economia 1029, Banco de la Republica de Colombia.
    7. Nidia Ruth Reyes & José Eduardo Gómez G. & Jair Ojeda Joya, 2013. "Bank Lending, Risk Taking, and the Transmission of Monetary Policy: New Evidence for Colombia," BORRADORES DE ECONOMIA 010970, BANCO DE LA REPÚBLICA.
    8. repec:col:000094:010860 is not listed on IDEAS
    9. repec:bdr:bdrlib:2013-09 is not listed on IDEAS
    10. repec:bdr:bdrcap:2013-09-261-299 is not listed on IDEAS

    More about this item

    Keywords

    monetary policy; lending standards; risk taking; duration analysis; probit models.;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdr:borrec:690. 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). General contact details of provider: http://edirc.repec.org/data/brcgvco.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.