Empirical Study Of Monetary Policy Affects The Bank Risk-taking

Monetary policy as one of the important instrument of government macro-control, itplays a significant role in economic development and financial stability. The excessivecredit expansion and asset price bubble caused by continuing loose monetary policy aswell as the bank regulation problem are considered to be the source of the subprimemortgage crisis in2007.The crisis has attracted researchers to rethink of monetarytransmission mechanism, and the influence of changes in monetary policy on bankrisk-taking behavior.Commercial banks play an intermediary role in mechanism that monetary policyaffect macroeconomic, and their own risks and benefits might be affected by changes inmonetary policy. Meanwhile, capital regulation may have influence on the flow of creditassets, consequently make an interference in the strength and orientation of the affect ofmonetary policy. Therefore, this paper start from the transmission channels of monetarypolicy, and make a study of how monetary policy influence bank risk-taking behavior bytaking capital regulation into consideration. The study is helpful to strengthen thecoordination between monetary policy and regulation system in order to maintain financialstability and achieve policy effect，as well as provide advices for making a decision aboutbank risk-taking behavior.In this paper, we choose data of64commercial banks from2002to2012as thesample and establish a dynamic panel model, then we use system GMM method toestimate the coefficients of data. This paper aim to analysis how monetary policy and bankcapital afflect bank risk-taking level.The results show that:(1)There is a negative correlation between monetary policyand bank risk-taking. With loose monetary policy, the interest rates decrease, and thelevel of bank risk-taking increase. And the risk is dynamic and continuous;(2)The highercapital adequacy ratio of banks, the impact of monetary policy on bank risk-taking will beweaker;(3)The monetary policy has diverse influences on different kinds of bankrisk-taking behavior.