Do banks take excessive risks?

  • 張 毓文

Student thesis: Master's Thesis

Abstract

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
Date of Award2016 Jun 15
Original languageEnglish
SupervisorPing-Hsun Huang (Supervisor)

Cite this

Do banks take excessive risks?
毓文, 張. (Author). 2016 Jun 15

Student thesis: Master's Thesis