We provide a theoretical foundation for the claim that prolonged periods of easy monetary conditions increase bank risk … taking. The net effect of a monetary policy change on bank monitoring (an inverse measure of risk taking) depends on the … structures, a monetary easing leads to greater leverage and lower monitoring. However, if a bank's capital structure is fixed …

in government money, where the terms of bank deposit contracts are affected by the liquidity insurance available in … contracts combined with a central bank lender-of-last-resort facility to promote efficient liquidity insurance and a panic … framework in which fractional reserve banks emerge in equilibrium, where bank assets are funded with liabilities made demandable …

years 1980-1995 and providing empirical evidence for six European countries, namely Germany, France, Italy, the UK, Belgium …

limited liability and deposit insurance, and characterize the policy tools that implement efficient risk taking. In the …

burden of the banking sector is modest. We model a regulator whose trade-off between bank risk and credit supply is derived … has through bank incentives. The larger the correlation between banks' projects, the more important the role for monetary … policy. In a dynamic setting, not internalizing bank risk leads a monetary authority to keep rates low for too long after a …