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Managing risk taking with interest rate policy and macroprudential regulations / by Simona E. Cociuba, Malik Shukayev, and Alexander Ueberfeldt.FB3-5/2016-47E-PDF

"We develop a model in which a financial intermediary’s investment in risky assets—risktaking— is excessive due to limited liability and deposit insurance and characterize thepolicy tools that implement efficient risk taking. In the calibrated model, coordinatinginterest rate policy with state-contingent macroprudential regulations, either capital orleverage regulation, and a tax on profits achieves efficiency. Interest rate policy mitigatesexcessive risk taking by altering both the return and the supply of collateralizable safeassets. In contrast to commonly used capital regulation, leverage regulation has strongereffects on risk taking and calls for higher interest rates"--Abstract, p. ii.

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Publication information
Department/Agency
  • Bank of Canada.
TitleManaging risk taking with interest rate policy and macroprudential regulations / by Simona E. Cociuba, Malik Shukayev, and Alexander Ueberfeldt.
Series title
  • Staff Working Paper, 1701-9397 ; 2016-47
Publication typeMonograph - View Master Record
Language[English]
FormatDigital text
Electronic document
Note(s)
  • "November 2016."
  • Includes bibliographical references (p. 33-35).
  • Includes abstract in French.
Publishing information
  • [Ottawa] : Bank of Canada, c2016.
Author / Contributor
  • Cociuba, Simona E.
  • Shukayev, Malik.
  • Ueberfeldt, Alexander.
Descriptionii, 51 p.
Catalogue number
  • FB3-5/2016-47E-PDF
Subject terms
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