Commercial Surveys

Commercial Surveys

The Effect of Monetary Policy Transparency on the Relationship Between Monetary Policy and Banks' Risk-Taking, Cross-Country Study

Document Type : Original Article

Authors
1 Ph.D. Candidate in Economics, Department of Economics ,Firoozkooh Branch,Islamic Azad University ,Firoozkooh ,Iran,
2 Associate professor of Economics, Department of Economics ,Firoozkooh Branch,Islamic Azad University ,Firoozkooh ,Iran
3 Assistant professor of Economics, Department of Economics ,Tehran North Branch,Islamic Azad University ,Tehran ,Iran
Abstract
In this study, the effect of monetary policy transparency on the relationship between monetary policy and banks' risk-taking by using different indicators of Dincer and Eichengreen monetary policy transparency (political transparency, economic transparency, Procedural transparency, policy transparency, operational transparency, overall transparency level) using panel data of banks in emerging economics, were surveyed during the years 2005 to 2017  by two econometrics methods: fixed effect estimator econometrics and systematic GMM (Generalized Method of Moments System). The results of the models show that the coefficients of monetary policy indicators are positive and statistically significant in all regressions and this result indicates that, as interest rates fall, bank risk increases. The results of the estimates also show that Banks' risk-taking in response to expansionary monetary policy, as the transparency of monetary policy by central banks increases, it decreases and the impact of monetary policy shocks has diminished when monetary policy is designed and implemented in a more transparent manner.
 
 
Keywords

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Volume 20, Issue 115 - Serial Number 115
September and October 2022
Pages 125-144

  • Receive Date 03 November 2021
  • Revise Date 01 February 2022
  • Accept Date 06 February 2022