Economics, Econometrics and Finance
4 years ago

Monetary policy's hidden risk-taking impact on financial stability revealed!

Journal of Financial Stability
Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?
Claudio Borio, Haibin Zhu

Paper Summary

Related papers

Economics, Econometrics and Finance
3 years ago

New liquidity scheme boosts market stability and reduces trading costs significantly

Asset Pricing
Banking Finance
Option Pricing
3 views
Economics, Econometrics and Finance
4 years ago

Informed trading boosts market liquidity without impacting order prices.

Asset Pricing
Corporate Governance
Earnings Management
2 views
Business, Management and Accounting
4 years ago

Market volatility increases liquidity commonality, impacting China's economy.

Corporate Governance
Banking Finance
Asset Pricing

The article discusses how changes in the financial system and regulations have made the link between monetary policy and risk-taking by businesses more important. This "risk-taking channel" of monetary policy affects how businesses perceive and price risk, which can impact the economy. The current models used to guide monetary policy may not fully capture this relationship, making them less effective.