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The risk-taking channel of monetary policy in Korea
- The risk-taking channel of monetary policy in Korea
- Kim, Moohwan
- The Association of Korean Economic Studies
| Title |
The risk-taking channel of monetary policy in Korea
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| Material Type | Article |
| 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 |
| License |  |
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.
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