Low rates push investors to seek risk abroad – BIS paper

Low rates at home may encourage investors to buy riskier bonds in the US

Research published by the Bank for International Settlements finds a link between low domestic interest rates and higher rates of risk-taking abroad.

The working paper, by John Ammer, Stijn Claessens, Alexandra Tabova and Caleb Wroblewski, makes use of the granular data available on foreign holders of US securities to overcome what the authors describe as a “paucity” of data in many countries.

The approach also helps them avoid “an important pitfall of the single-country study”, in that the

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