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The risk-taking channel of monetary policy in Korea

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  • The risk-taking channel of monetary policy in Korea
  • Kim, Moohwan
  • The Association of Korean Economic Studies


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Title The risk-taking channel of monetary policy in Korea
Similar Titles
Material Type Articles
Author(English)

Kim, Moohwan

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2014-12
Journal Title; Vol./Issue Korea and the World Economy:vol. 15(no. 3)
Pages 27
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Holding AKES

Abstract

This paper evaluates the impact on the bank risk of some control variables and the specific characteristics of five domestic banks in Korea by using data from the fourth quarter of 2005 to the fourth quarter of 2013 in order to test the risk-taking channel of monetary policy. Bank risk is measured by credit default swap (CDS) premium. In particular, this study focuses on the relationship between bank risk and the nominal short-term interest rate that reflects monetary policy. As the period of low interest rates becomes longer, banks are willing to take greater risks. This study confirmed that the risk-taking channel exists. This means that monetary policy has a direct impact on financial stability.