About this article
Published Online: Jul 16, 2020
Page range: 33 - 53
DOI: https://doi.org/10.2478/jcbtp-2020-0022
Keywords
© 2020 Bayront Yudit Rumondor et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 Public License.
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.