Further, the balance of these effects depends on the structure and contestability of the banking industry, and is therefore likely to vary across countries and over time.Terry Brooks was born in Illinois in 1944, where he spent a great deal of his childhood and early adulthood dreaming up stories in and around Sinnissippi Park, the very same park that would eventually become the setting for his bestselling Word & Void trilogy. However, if a bank's capital structure is fixed, the balance depends on the degree of bank capitalization: when facing a policy rate cut, well capitalized banks decrease monitoring, while highly levered banks increase it. When banks can adjust their capital structures, a monetary easing leads to greater leverage and lower monitoring. The net effect of a monetary policy change on bank monitoring (an inverse measure of risk taking) depends on the balance of three forces: interest rate pass-through, risk shifting, and leverage. Book excerpt: We provide a theoretical foundation for the claim that prolonged periods of easy monetary conditions increase bank risk taking. This book was released on with total page 38 pages. Book Synopsis Monetary Policy, Leverage, and Bank Risk Taking by : Mr.Luc LaevenÄownload or read book Monetary Policy, Leverage, and Bank Risk Taking written by Mr.Luc Laeven and published by International Monetary Fund.
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