<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper investigates the impact of capital flows on bank risk-taking behavior. It undertakes two levels of empirical estimations, namely (i) single-country industry-level; and (ii) multi-country industry-level estimations, covering emerging market economies. The results suggest that capital inflows, in the form of portfolio investment, is significant in raising risk-taking behavior. Large banks are less aggressive in their risk-taking behavior vis-à-vis smaller banks. Such impact of portfolio investment on risk-taking behavior is also shown in the multi-country level estimates.</p></abstract>

This paper investigates the impact of capital flows on bank risk-taking behavior. It undertakes two levels of empirical estimations, namely (i) single-country industry-level; and (ii) multi-country industry-level estimations, covering emerging market economies. The results suggest that capital inflows, in the form of portfolio investment, is significant in raising risk-taking behavior. Large banks are less aggressive in their risk-taking behavior vis-à-vis smaller banks. Such impact of portfolio investment on risk-taking behavior is also shown in the multi-country level estimates.

Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 Public License.

{"article-title":"Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia"}

This paper investigates the impact of capital flows on bank risk-taking behavior. It undertakes two levels of empirical estimations, namely (i) single-country...

Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia

Published Online: Jul 16, 2020

Page range: 33 - 53

DOI: https://doi.org/10.2478/jcbtp-2020-0022

Keywords
Capital flows, Bank risk-taking behavior, Panel data

© 2020 Bayront Yudit Rumondor et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia

Published Online: Jul 16, 2020

Page range: 33 - 53

DOI: https://doi.org/10.2478/jcbtp-2020-0022

KeywordsCapital flows, Bank risk-taking behavior, Panel data

© 2020 Bayront Yudit Rumondor et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Keywords
Capital flows, Bank risk-taking behavior, Panel data