Low Interest Rates and Risk Taking: Evidence from Individual Investment Decisions

2016 ◽  
Author(s):  
Chen Lian ◽  
Yueran Ma ◽  
Carmen Wang
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Investment Decisions ◽  
Low Interest Rates

scholarly journals Low Interest Rates and Risk-Taking: Evidence from Individual Investment Decisions

2018 ◽  
Vol 32 (6) ◽  
pp. 2107-2148 ◽  
Author(s):  
Chen Lian ◽  
Yueran Ma ◽  
Carmen Wang
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Investment Decisions ◽  
Low Interest Rates

Bank Risk-taking, Securitization, Supervision, and Low Interest Rates: Evidence from the Euro-area and the U.S. Lending Standards

2011 ◽  
Vol 24 (6) ◽  
pp. 2121-2165 ◽  
Author(s):  
Angela Maddaloni ◽  
José-Luis Peydró
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
Risk Taking ◽  
Bank Risk ◽  
Lending Standards ◽  
Low Interest Rates ◽  
The U.S

scholarly journals Low interest rates and executive risk-taking incentives: Evidence from the United States

2020 ◽  
pp. 234094442092771
Author(s):  
Paula Castro ◽  
Maria T Tascon ◽  
Francisco J Castaño ◽  
Borja Amor-Tapia
Keyword(s):  
United States ◽  
Interest Rates ◽  
Risk Taking ◽  
The United States ◽  
Jel Classification ◽  
Short Term ◽  
Monetary Policies ◽  
Stock Return Volatility ◽  
Low Interest Rates ◽  
Institutional Shareholders

This article contributes to the literature by indicating how certain monetary policies impact the compensation incentives of US managers to adopt riskier business policies. Specifically, based on the agency problems between shareholders and managers and between shareholders and creditors, a research framework is developed to identify the influence of low interest rates on managers’ risk-taking incentives proxied by the sensitivity of executive compensation to stock return volatility (Vega). We examine 1,293 firms in the United States between 2000 and 2016, and the results indicate that low interest rates increase the managers’ short-term risk-taking incentives and that those incentives contribute to the risk effectively taken by the firm. Our results are robust to the use of alternative monetary proxies and to the presence of passive versus active institutional shareholders. JEL CLASSIFICATION E41; E43; E51; M12; M52

scholarly journals IMPLICATIONS OF LOW INTEREST RATES ON BANK PROFITABILITY AND RISK-TAKING

2021 ◽  
pp. 1-27
Author(s):  
MANUELA ENDER ◽  
CORINNA NEUHOFER
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Qualitative Content Analysis ◽  
Negative Influence ◽  
Mitigation Strategies ◽  
Bank Profitability ◽  
Interest Income ◽  
Low Interest Rates ◽  
State Of Research ◽  
The Impact

This paper investigates the effect of low interest rates on bank profitability and risk-taking. A comprehensive depiction of the current state of research was developed based on systematic literature review and qualitative content analysis. A low interest rate environment, as present in many economies, has various implications on bank profitability and risk-taking. A positive relationship is found between interest rates and net interest income, while the relationship with non-interest income is negative. Also, banks increase risk-taking in search for yield. The influence on bank profitability is highly dependent on several factors, but in most papers a negative influence is found. Throughout the world banks have managed to limit the impact through mitigation strategies, such as diversification, which are presented as guidance.

scholarly journals Bank profitability and risk-taking under low interest rates

2017 ◽  
Vol 23 (1) ◽  
pp. 3-18 ◽  
Author(s):  
Jacob A. Bikker ◽  
Tobias M. Vervliet
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Bank Profitability ◽  
Low Interest Rates

scholarly journals Collateralized borrowing and risk taking at low interest rates

2016 ◽  
Vol 85 ◽  
pp. 62-83 ◽  
Author(s):  
Simona E. Cociuba ◽  
Malik Shukayev ◽  
Alexander Ueberfeldt
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Low Interest Rates

DO BANKS TAKE UNUSUAL RISKS WHEN INTEREST RATES ARE EXPECTED TO STAY LOW FOR A LONG TIME?

2017 ◽  
Vol 23 (06) ◽  
pp. 2409-2433
Author(s):  
Paul Gaggl ◽  
Maria Teresa Valderrama
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Risk Taking ◽  
Bank Risk ◽  
Short Term ◽  
European Central ◽  
Loan Portfolios ◽  
Low Interest Rates ◽  
Long Time

The financial woes that initiated the financial crisis of 2007/08 have, at least in part, been traced to excessive bank risk-taking. What induced this behavior? One explanation is the persistently low short-term interest rates during the mid-2000s. We exploit an extensive panel of matched Austrian banks and firms during 2000–2008 to investigate the effects of the European Central Bank's (ECB) policy of persistently low interest rates during 2003q3–2005q3. Our analysis suggests that this policy likely caused Austrian banks to hold risker loan portfolios than they would have in its absence.

scholarly journals Bank Profitability and Risk-Taking Under Low Interest Rates

2017 ◽  
Author(s):  
Jacob Antoon Bikker ◽  
Tobias Vervliet
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Bank Profitability ◽  
Low Interest Rates
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