Monetary policy and bank risk-taking in sub-Sahara Africa

Domain:

socioeconomic

Record type:

paper

Creator:

Gab

Publisher:

Cen

Host:

Monetary policy has been shown to influence the risk-taking behaviour of banks in Europe and North America. Africa has however received limited attention in this regard. This study contributes to the monetary policy and bank risk-taking literature for sub-Sahara Africa by examining a panel of commercial banks from 2001-2015 for different types of risks. We find that monetary policy significantly influences bank risk-taking both statistically and economically, but the effect differs across the types of risks. Bank size and profitability are important in determining how effective monetary policy impacts risk-taking. The effects are stronger for countries without exchange rate controls. In terms of policies, monetary authorities intending to pursue expansionary monetary policy must remedy the risk-taking response by banks.

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doi.org

Licenses

http://creativecommons.org/licenses/BY/4.0

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