Economic Policy Uncertainty in Banking: A Literature Review
Handbook of Research on Financial Management During Economic Downturn and Recovery, Forthcoming
23 Pages Posted: 28 May 2021
Date Written: May 23, 2021
This paper is a survey of the most important research in the economic policy uncertainty literature. Economic policy uncertainty, although still under-researched relative to mainstream topics in economics and finance, has recently received increased scholarly attention. Through synthesizing common themes in the literature, the paper highlights the progress made so far and suggest some avenues for future research which allows future researchers to position their research and differentiate themselves from other studies in the literature. The paper finds that economic policy uncertainty affects banks through a reduction in credit supply and loan re-pricing. High economic policy uncertainty compel bank managers to discretionary distort bank financial reporting in ways that help them to mitigate the depressing effect of economic policy uncertainty on their profitability.
Keywords: economic policy uncertainty, banking, banks, uncertainty, index, news, government, tax code, inflation, elections
JEL Classification: G21, G28
Suggested Citation: Suggested Citation