Abstract
Risk taking channel in the monetary transmission is the channel which explains the relation between the low policy interest rates resulted from the too low CB policies pursued for a long period of time and bank risk taking behaviors. In this article, the existence of risk taking channel is examined over the period 2002-2018 by using yearly data and GMM method. The direct and distributional effects of bank characteristics on bank risk taking behavior are analyzed. Change in Non Performing Loans(NPL) Ratio is used as a risk indicator. Our findings show that when the interest rates fall below the benchmark rate, the risk taking behavior of banks do not change. In other words, results do not present evidence for the existence of risk taking channel in Turkey. So the monetary policies of CBTR do not change the risk taking behavior of banks. However, bank size and bank capital are the bank characteristics which affect the bank risk taking behavior and credit risk of banks. Additionally, following the literature saying that global financial factors should be taken into account in evaluating the risk taking channel in emerging markets, global financial measures are included to our analysis. Our findings show that global financial measures are significant in the risk taking behavior of Turkish banks.
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