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Real interest rates, bank borrowing, and fragility

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Bibliographic Details
Authors and Corporations: Ahnert, Toni (Author), Anand, Kartik (Author), König, Philipp Johann (Author)
Other Authors: Anand, Kartik [Author] • König, Philipp Johann [Author]
Type of Resource: E-Book
Language: English
published:
Frankfurt am Main Deutsche Bundesbank [2022]
Series: Deutsche Bundesbank: Discussion paper ; no 2022, 48
Subjects:
Source: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
ISBN: 9783957299277
Description
Summary: How do real interest rates affect financial fragility? We study this issue in a model in which bank borrowing is subject to rollover risk. A bank’s optimal borrowing trades off the benefit from investing additional funds into profitable assets with the cost of greater risk of a run by bank creditors. Changes in the interest rate affect the price and amount of borrowing, both of which influence bank fragility in opposite directions. Thus, the marginal impact of changes to the interest rate on bank fragility depends on the level of the interest rate. Finally, we derive testable implications that may guide future empirical work.
Physical Description: 1 Online-Ressource (circa 34 Seiten); Illustrationen
ISBN: 9783957299277