The interaction between interest rates and banks’ market power generates a motive for bank risk-taking. Low interest rates depress bank profits from the deposit market as competition from cash intensifies. Limited liability and the consequent low bank market value move banks closer to the convex region of their payoff function and thus lead to more risk-taking. We estimate a model that embodies this intuition. We find that when interest rates are low, over 10% of new loans exceed the number that would be optimal in a counterfactual world with no risk-taking incentives.

中文翻译：

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具有市场支配力的银行的低利率和风险激励

利率与银行市场支配力之间的相互作用产生了银行承担风险的动机。随着现金竞争加剧，低利率抑制了银行从存款市场获得的利润。有限责任和随之而来的低银行市值使银行更接近其收益函数的凸区域，从而导致更多的风险承担。我们估计了一个体现这种直觉的模型。我们发现，当利率较低时，超过 10% 的新贷款超过了在没有冒险动机的反事实世界中的最佳数量。