Economic Policy Uncertainty and Bank Stability

Abstract

We examine the influence of economic policy uncertainty on bank stability post-2007-2008 global financial crisis. We rely on the economic policy uncertainty (EPU) index introduced by Baker et al. (2016). We use 176,477 quarterly observations for US commercial banks over the period from 2011Q1 to 2020Q3 and find consistent and robust evidence that bank stability decreases as the level of economic policy uncertainty increases. We specifically control for demand-side effects which indicates that the decrease in bank stability not only originates from borrowers' and customers' conditions but also from a change in bank behavior. A deeper investigation shows that the negative impact of policy uncertainty on bank stability is stronger for larger banks, and weaker for highly capitalized banks as well as for more liquid banks. Our findings have important implications particularly for the COVID-19 policy implementations.

Uncertainty in banking and debt financing of firms in Vietnam

“…Subsequently, in the second step, we estimate the influence of these mediators on corporate debt. Many recent studies on finance and uncertainty employ this approach for channel tests with mediators [ 51 , 52 , 58 – 60 ].…”

“…The error term in our model is represented by ε i , t . We lag the independent variables to address potential reverse-causality concerns and consider firms’ delayed responses to uncertainty and other shocks [ 47 , 49 – 52 ]. It should also be noted that we examined the effects of both non-lagged uncertainty values and those with two-period (and beyond) lags; however, these results were consistently insignificant.…”

Avrupa Birliği ülkeleri arasında banka sermaye yapısı açısından yakınsama

“…Yapılan analiz sonuçları yasal sermaye ile bilanço içi likidite yaratma arasında negatif bir ilişki tespit etmekle birlikte küçük bankalar için ve finansal krizden sonra pozitif bir ilişkinin olduğunu ortaya koymuştur. Danisman & Tarazi (2024) tarafından yapılan çalışmada 2011'den 2020'nin 3. çeyreğine kadar ABD ticari bankaları örnekleminde Ekonomik politika belirsizliğinin 2007-2008 küresel mali kriz sonrası banka istikrarı üzerindeki etkisi ele alınmıştır. Yapılan analizler sonucunda ekonomik politika belirsizliğinin banka istikrarı üzerindeki olumsuz etkisinin yüksek sermayeli bankalar açısından daha zayıf olduğu tespit edilmiştir.…”