Macroeconomic Uncertainty And Bank Lending Behavior:Evidence From Macro-and Micro-level Data

Many commentators have made two claims about economic uncertainty. First, that it increased after the start of the2007—2009recession because of businesses and households uncertainty about future tax, spending and monetary policies. Second, that this increase in uncertainty slowed the recovery from the recession by leading business and households to postpone investment, hiring and consumption expenditure. Soon after the start of the2007—2009recession, non-performing loan ratio of the European banks had risen and the bank crisis broke out. So a lot of scholars focus on the study of the effect of macroeconomic uncertainty on banks. The literatures mainly focus on the following aspects:the measures of macroeconomic, the relationship between macroeconomic uncertainty and bank behavior, risk management.Our result shows that he link between macroeconomic uncertainty and bank lending behavior is considerably significant. As bankers can hardly predict where the economy will go when macroeconomic uncertainty increases, banks will decrease their supply of loans. The result achieves for subsamples based on nature and size of banks. But the result is not significant for subsamples based on profitability.To some extent, our study is meaningful for monetary policy making and banking supervision. Central bank can take the effect of macroeconomic uncertainty on bank lending behavior into consideration before she makes monetary policies so as to make more appropriate and efficient monetary policies. Besides, our study helps bank supervision apartment find out how the riskiness of the whole system changes. This should allow for better bank supervision, thus minimizing the effect of external shocks.