Financial Stability and Monetary Policy - The Case of Brazil

Benjamin Tabak, Marcela Laiz and Daniel Cajueiro

No 217, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: This paper investigates the effects of monetary policy over banks' loans growth and non-performing loans for the recent period in Brazil. We contribute to the literature on bank lending and risk taking channel by showing that during periods of loosening/tightening monetary policy, banks increase/decrease their loans. Moreover, our results illustrate that large, well-capitalized and liquid banks absorb better the effects of monetary policy shocks. We also find that low interest rates lead to an increase in credit risk exposure, supporting the existence of a risk-taking channel. Finally, we show that the impact of monetary policy differs across state-owned, foreign and private domestic banks. These results are important for developing and conducting monetary policy.

Date: 2010-10
New Economics Papers: this item is included in nep-cba, nep-lam, nep-mac and nep-mon
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Citations: View citations in EconPapers (16)

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Journal Article: Financial Stability and Monetary Policy - The case of Brazil (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bcb:wpaper:217

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