New study shows higher liquidity requirements reduce bank risk-taking
The article explores how rules about how much money banks must keep on hand and changes in interest rates affect how much risk banks take when making loans. When banks have to keep more money on hand, they make safer loans but invest less. It's always best to have some rules about how much money banks must keep. Changes in interest rates affect how strict these rules should be, and they should be stricter when interest rates are very low.