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Interest rates and the risk-taking incentives of bank CEOs

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  • Jijun Niu

    (Simon Fraser University)

Abstract

The risk-taking channel of monetary policy predicts a negative relationship between interest rates and the risk-taking incentives of bank CEOs. Using a sample of U.S. banks over the period 1992-2006, we provide empirical evidence consistent with this prediction. Our finding holds for both short-term and long-term interest rates.

Suggested Citation

  • Jijun Niu, 2012. "Interest rates and the risk-taking incentives of bank CEOs," Economics Bulletin, AccessEcon, vol. 32(2), pages 1555-1570.
    • Handle: RePEc:ebl:ecbull:eb-12-00203
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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I2-P150.pdf
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    References listed on IDEAS

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    Cited by:

    1. Tomasz Chmielewski & Mariusz Kapuściński & Andrzej Kocięcki & Tomasz Łyziak & Jan Przystupa & Ewa Stanisławska & Ewa Wróbel, 2018. "Monetary transmission mechanism in Poland. What do we know in 2017?," NBP Working Papers 286, Narodowy Bank Polski.
    2. Alin Marius ANDRIES & Vasile COCRIS & Ioana PLESCAU, 2015. "Low Interest Rates And Bank Risk-Taking: Has The Crisis Changed Anything? Evidence From The Eurozone," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 15, pages 125-148, June.

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    More about this item

    Keywords

    bank; interest rates; risk taking; managerial compensation;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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