A range of empirical studies indicate that, when interest rates are low, financial institutions make riskier investment decisions, see, e.g., Maddaloni and Peydró (2011), Buch, Eickmeier and Prieto (2014), Jimènez, Ongena, Peydró and Saurina (2014), Altunbas, Gambacorta and Marques-Ibanez (2014), Ioannidou, Ongena and Peydró (2015), Dell’Ariccia, Laeven and Suarez (2017), and Paligorova and Santos (2017) in respect of banks.
A similar link has been identified for other types of investors such as mutual funds (Choi and Kronlund, 2018), money market funds (Chodorow-Reich, 2014; Di Maggio and Kacperczyk, 2017), pension funds (ChodorowReich, 2014), and retail investors (Hau and Lai, 2016). 14. See Bundesbank (2022b).