<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The objective of this research paper is to examine the impact of monetary policy conditions on bank risk-taking in the Western Balkan countries. The paper tries to identify if monetary policy conditions, especially money interest rates, may induce a greater appetite for bank risk-taking in the Western Balkan countries. The impact of macroeconomic and banking indicators on bank risk-taking will be examined, too. For this purpose, we apply pooled OLS techniques, Fixed and Random effects panel, and Hausman-Taylor Instrumental IV model. The econometric results show a negative correlation between the monetary policy rate and bank risk-taking, rejecting the hypothesis that monetary policy rates indicate bank risk increase. However, expansive credit policies or loan portfolio growth have a positive impact on bank risk-taking in the Western Balkans. The study is original, and its findings will be of value to Central Banks and other policymakers in the Western Balkan countries.</p>
</abstract>

The objective of this research paper is to examine the impact of monetary policy conditions on bank risk-taking in the Western Balkan countries. The paper tries to identify if monetary policy conditions, especially money interest rates, may induce a greater appetite for bank risk-taking in the Western Balkan countries. The impact of macroeconomic and banking indicators on bank risk-taking will be examined, too. For this purpose, we apply pooled OLS techniques, Fixed and Random effects panel, and Hausman-Taylor Instrumental IV model. The econometric results show a negative correlation between the monetary policy rate and bank risk-taking, rejecting the hypothesis that monetary policy rates indicate bank risk increase. However, expansive credit policies or loan portfolio growth have a positive impact on bank risk-taking in the Western Balkans. The study is original, and its findings will be of value to Central Banks and other policymakers in the Western Balkan countries.

The Impact of Monetary Policy on Bank Risk in the Western Balkan Countries

SEEU Review

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

{"article-title":"The Impact of Monetary Policy on Bank Risk in the Western Balkan Countries"}

The objective of this research paper is to examine the impact of monetary policy conditions on bank risk-taking in the Western Balkan countries. The paper...

The Impact of Monetary Policy on Bank Risk in the Western Balkan Countries

Published Online: Dec 29, 2023

Page range: 4 - 18

DOI: https://doi.org/10.2478/seeur-2023-0016

Keywords
Monetary policy, low-interest rate, credit policies, NPL, bank risk-taking

© 2023 Fatmir Gashi et al., published by Sciendo

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

The Impact of Monetary Policy on Bank Risk in the Western Balkan Countries

Published Online: Dec 29, 2023

Page range: 4 - 18

DOI: https://doi.org/10.2478/seeur-2023-0016

KeywordsMonetary policy, low-interest rate, credit policies, NPL, bank risk-taking

© 2023 Fatmir Gashi et al., published by Sciendo

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

Keywords
Monetary policy, low-interest rate, credit policies, NPL, bank risk-taking