Monetary Policy Transmission and Bank Risk-Taking: Insights from a Bibliometric Review

Abstract

The study incorporates a systematic, organized literature review of the relationship between monetary policy (MP) and bank risk-taking (BRT) using bibliometric methods, complemented by thematic analysis. Financial intermediation and economic stability heavily rely on banks, and effective risk management is a key component of financial system resilience. Central banks have a key tool of macroeconomic governance, monetary policy, which affects credit conditions, liquidity, and risk incentives in the banking sector. The academic focus on the MPBRT nexus has grown rapidly, especially following the Global Financial Crisis (GFC) of 2008. This bibliometric evidence has identified a strong geographical concentration in research output, with the United States as the most influential contributor to research on monetary policy, the bank lending channel, and dual banking systems, and China is also a leading contributor to research on bank risk. The Journal of Banking and Finance is the most fruitful and the most cited ingeneral bank risk literature. The major themes identified through keyword analysis are: bank risk-taking, risk management, monetary policy, financial crisis, and corporate governance. The thematic discussion shows that there is a risk-taking channel of monetary policy: accommodative policies and low interest rates lower perceived risk and encourage banks to take on more risk. Nevertheless, liquidity's impact is dynamic and situational, and global crises, including the GFC and the COVID-19 pandemic, substantially affect banks' risk behavior and policy performance.