Arbeitspapier
The risk-taking channel of liquidity regulations and monetary policy
We study the implications of liquidity regulations and monetary policy on depositmaking and risk-taking. Banks give risky loans by creating deposits that firms use to pay suppliers. Firms and banks can take more or less risk. In equilibrium, higher liquidity requirements always lower risk at the cost of lower investment. Nevertheless, a positive liquidity requirement is always optimal. Monetary conditions affect the optimal size of liquidity requirements, and the optimal size is countercyclical. It is only optimal to impose a 100% liquidity requirement when the nominal interest rate is sufficiently low.
- Language
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Englisch
- Bibliographic citation
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Series: Discussion Papers ; No. 18-15
- Classification
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Wirtschaft
- Event
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Geistige Schöpfung
- (who)
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Imhof, Stephan
Monnet, Cyril
Zhang, Shengxing
- Event
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Veröffentlichung
- (who)
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University of Bern, Department of Economics
- (where)
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Bern
- (when)
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2018
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Imhof, Stephan
- Monnet, Cyril
- Zhang, Shengxing
- University of Bern, Department of Economics
Time of origin
- 2018
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