ECB paper presents evidence of risk-taking channel in US
Working paper finds interest rates affect the quality of bank credit in the US
Interest rates in the US have a small "but economically meaningful" effect on bank risk-taking, according to a working paper published by the European Central Bank (ECB).
Giovanni Dell'Ariccia, Luc Laeven and Gustavo Suarez use confidential data on banks' internal ratings on loans to businesses from 1997 to 2011, in Bank leverage and monetary policy's risk-taking channel: evidence from the United States.
They find the quality of lending, which they measure using the rating on new loans, drops
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