Do banks take excessive risks?

• Main Authors: Yu-WenChang, 張毓文
• Other Authors: Ping-Hsun Huang
• Format: Others
• Language: en_US
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/74229189723970554795

碩士 === 國立成功大學 === 財務金融研究所 === 104 === This paper tests the hypothesis that low interest rates are likely to exacerbate banks’ risk-taking behavior by examining approximately 6000 annual observations in the United States over the period of 2001-2015. I find mixed results. Inconsistent with this hypothesis, I find that banks’ risk assets rise with short-term rate, long-term rate, and central bank rate. However, I find opposite results when I measure the level of banks’ risk-taking by non-performing loans. In addition, I find that heterogeneous risk-taking behavior is likely to result from differential bank characteristics. Specifically, less efficient banks tend to take on higher risk than more efficient counterparts.