Ownership diversity and the risk-taking channel of monetary policy transmission

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dc.contributor.authorCaselli, Giorgio
dc.contributor.authorFigueira, Catarina
dc.contributor.authorNellis, Joseph G.
dc.date.accessioned2020-09-21T14:08:39Z
dc.date.available2020-09-21T14:08:39Z
dc.date.issued2020-07-04
dc.description.abstractThis paper joins a rapidly growing body of literature that aims to uncover the link between monetary policy and bank risk taking. We investigate the hypothesis that the ownership composition of the banking system moderates monetary policy transmission via the risk-taking channel. Borrowing measures used in ecology to quantify diversity of species within an ecosystem and first applied to the field of finance by Michie, J. and Oughton, C. 2013. ‘Measuring Diversity in Financial Services Markets: A Diversity Index’, Centre for Financial and Management Studies Discussion Papers no. 113, this paper shows that the impact of exogenous monetary policy shocks on banks’ probability of default is reduced in countries with greater ownership diversity. We also find that—ceteris paribus—shareholder- and stakeholder-oriented banks located in more ownership-diverse systems tend to have a lower appetite for risk than their counterparts operating in less diverse markets. These results are robust across several econometric specifications and emphasise the stabilising role played by ownership diversity in modern financial systems. At the same time, our evidence suggests that a more interdisciplinary approach, firmly grounded in the applied, empirical research methodology, can provide novel and useful insights into the implications of monetary policy for financial and economic outcomes.en_UK
dc.identifier.citationCaselli G, Figueira C, Nellis JG. (2020) Ownership diversity and the risk-taking channel of monetary policy transmission, Cambridge Journal of Economics, Volume 44, Issue 6, November 2020, pp. 1329-1364en_UK
dc.identifier.issn0309-166X
dc.identifier.urihttps://doi.org/10.1093/cje/beaa011
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/15817
dc.language.isoenen_UK
dc.publisherCambridge University Pressen_UK
dc.rightsAttribution-NonCommercial 4.0 International*
dc.rights.urihttp://creativecommons.org/licenses/by-nc/4.0/*
dc.titleOwnership diversity and the risk-taking channel of monetary policy transmissionen_UK
dc.typeArticleen_UK

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