We assess the effects of monetary policy on bank risk to verify the existence of a risk-taking channel - monetary … concentrate on the bank funding side. Then, to rationalize this evidence we build a macro model where banks subject to runs … endogenously choose their funding structure (deposits vs. capital) and risk level. A monetary expansion increases bank leverage and …

cutoff depends on the degree of bank competition. It is therefore expected to vary across countries and over time …The recent global financial crisis has ignited a debate on whether easy monetary conditions can lead to greater bank …