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Accumulation of foreign currency reserves and risk-taking

Author

Listed:
  • Rasmus Fatum

    (University of Alberta)

  • James Yetman

    (BIS)

Abstract

We assess whether the accumulation of foreign currency reserves in the Asia-Pacific region may have unintended consequences in the form of increased private sector risk-taking. To do so we carry out a country-specific daily data event study analysis of the relationship between official announcements of reserves stocks and various proxy measures of risk-taking. Overall, our results suggest that reserves accumulation exerts no systematic influence on risk-taking.

Suggested Citation

  • Rasmus Fatum & James Yetman, 2019. "Accumulation of foreign currency reserves and risk-taking," GRU Working Paper Series GRU_2019_019, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    • Handle: RePEc:cth:wpaper:gru_2019_019
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    File URL: https://www.cb.cityu.edu.hk/ef/doc/GRU/WPS/GRU%232019-019%20Fatum.pdf
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    2. Fatum, Rasmus & Hattori, Takahiro & Yamamoto, Yohei, 2023. "Reserves and risk: Evidence from China," Journal of International Money and Finance, Elsevier, vol. 134(C).
    3. Shakhlo T. Ergasheva & Azizkhan A. Tillyakhodjaev & Yokutxon K. Karrieva & Elena G. Popkova & Zhanna V. Gornostaeva, 2023. "Business Risks in COVID-19 Crisis Dataset Modeling: Regulatory vs. Marketing Tools of Risk Management," Risks, MDPI, vol. 11(11), pages 1-43, October.

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    Keywords

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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