Study on the Impact of Monetary Policy on Commercial Banks' Risk-taking from the Perspective of Game Theory

Based on the analysis of existing literatures, and combined with China's practice of monetary policy and financial environment, this paper firstly introduces the origin of the research on the impact of monetary policy on commercial bank's risk-taking, and sorts out the research status at home and abroad of this topic. Moreover, this paper derivates the impact of monetary policy on commercial bank's risk-taking behavior from the perspective of interest game theory between the central bank and the commercial bank, and demonstrates that the loose monetary policy with low interest rates will enhance the bank's risk appetite, increase the risk-taking behavior and thus the government must take the financial stability into consideration when developing the monetary policy.