Monetary policy impacts credit risk: CEPR paper
A Centre for Economic Policy Research paper published on Sunday finds evidence that monetary easing can lead to greater leverage and lower monitoring of risks when banks can adjust their capital structures.
Giovanni Dell'Ariccia, Luc Laeven and Robert Marquez, the paper's authors, develop a model of financial intermediation to examine how changes in the stance of monetary policy can affect the riskiness of borrowers.
Dell'Ariccia, Laeven and Marquez find evidence that suggests when banks can
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