An analysis of involuntary excess reserves, monetary policy and risk-taking behaviour of Chinese Banks
In this paper, we examine the effects of monetary policy on the
risk-taking behaviour of Chinese banks in the presence of involuntary
excess reserves based on a sample of 95 banks. We find that involuntary
excess reserves lead to more aggressive risk-taking suggesting that
large involuntary excess reserves stimulate the rapid expansion of
credit and the price bubble in the Chinese financial market. However,
banks with larger involuntary excess reserves tend to reduce risk-taking
more rapidly under the tightening monetary policy regime. The paper
sheds light on the effectiveness of government monetary policy in
reducing the risk-taking behaviour of banks in an emerging market where
involuntary excess reserves are present.
| Title: | An analysis of involuntary excess reserves, monetary policy and risk-taking behaviour of Chinese Banks |
| Authors: | Vu, Hong Thai Nguyen Boateng, Agyenim |
| Keywords: | Involuntary excess reserve, Banks, Monetary policy, China, Risk-taking |
| Issue Date: | 2015 |
| Publisher: | ELSEVIER SCIENCE INC, 360 PARK AVE SOUTH, NEW YORK, NY 10010-1710 USA |
| Citation: | ISIKNOWLEDGE |
| Abstract: | In this paper, we examine the effects of monetary policy on the risk-taking behaviour of Chinese banks in the presence of involuntary excess reserves based on a sample of 95 banks. We find that involuntary excess reserves lead to more aggressive risk-taking suggesting that large involuntary excess reserves stimulate the rapid expansion of credit and the price bubble in the Chinese financial market. However, banks with larger involuntary excess reserves tend to reduce risk-taking more rapidly under the tightening monetary policy regime. The paper sheds light on the effectiveness of government monetary policy in reducing the risk-taking behaviour of banks in an emerging market where involuntary excess reserves are present. (C) 2014 Elsevier Inc. All rights reserved. |
| Description: | INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS Volume: 37 Pages: 63-72 Published: JAN 2015 ; TNS05822 |
| URI: | http://www.sciencedirect.com/science/article/pii/S1057521914001872 http://repository.vnu.edu.vn/handle/VNU_123/33079 |
| ISSN: | 1057-5219 |
| Appears in Collections: | Bài báo của ĐHQGHN trong Web of Science |
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