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

Bayront Yudit Rumondor; Pakasa Bary

doi:10.2478/jcbtp-2020-0022

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

Journal of Central Banking Theory and Practice

Volume 9 (2020): Issue s1 (July 2020)

By: Bayront Yudit Rumondor and Pakasa Bary

Open Access

|Jul 2020

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.

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Articles in this issue

DOI: https://doi.org/10.2478/jcbtp-2020-0022 | Journal eISSN: 2336-9205

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Language: English

Page range: 33 - 53

Published on: Jul 16, 2020

Published by: Central Bank of Montenegro

In partnership with: Paradigm Publishing Services

Publication frequency: 3 issues per year

Keywords:

Capital flows,

Bank risk-taking behavior,

Panel data

Related subjects:

Business and economics,

Business management,

Business management, other

© 2020 Bayront Yudit Rumondor, Pakasa Bary, published by Central Bank of Montenegro
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 9 (2020): Issue s1 (July 2020)