Toothless tiger with claws?: financial stability communication, expectations, and risk-taking

Saved in:

Authors and Corporations:

Beutel, Johannes (Author), Metiu, Norbert (Author), Stockerl, Valentin (Author)

Other Authors:

Metiu, Norbert 1984- [Author] • Stockerl, Valentin [Author]

Type of Resource:

E-Book

Language:

English

published:

Frankfurt am Main Deutsche Bundesbank [2021]

Series:

Subjects:

central bank communication

financial stability

stock market expectations

randomized information experiment

Graue Literatur

Source:

Verbunddaten SWB
Lizenzfreie Online-Ressourcen

ISBN:

9783957298133

Description
Summary:	We study the effects of central bank communication about financial stability on individuals’ expectations and risk-taking. Using a randomized information experiment, we show that communication causally affects individuals’ beliefs and investment behavior, consistent with an expectations channel of financial stability communication. Individuals receiving a warning from the central bank expect a higher probability of a financial crisis and reduce their demand for risky assets. This reduction is driven by downward revisions in individuals’ expected Sharpe ratios due to lower expected returns and higher perceived downside risks. In addition, these individuals deposit a smaller fraction of their savings at riskier banks.
Physical Description:	1 Online-Ressource (circa 66 Seiten); Illustrationen
ISBN:	9783957298133