Economic Policy Uncertainty And Bank Risk Taking

The 2008 financial crisis was recognized as the most far-reaching financial crisis after the Great Depression of the 1930 s.The repeated twists and turns in the recovery process triggered widespread concern and discussion in the academic community on the causes and subsequent development of the crisis.Through the splitting of the influencing factors during the crisis and the comparison with the Great Depression,economic policy uncertainty is considered to be an important factor in the severe economic recession in the United States and Europe,and delays the process of economic recovery(FOMC,2009;IMF,2012,2013;Stock and Watson,2012;Baker,Bloom and Davis,2012).However,the previous research mainly explored the specific impact mechanism of policy uncertainty on the enterprise side of the capital demand side,but less on how the policy uncertainty affects the decision of the commercial bank of the fund provider.In fact,as a key link in economic operations,commercial banks have a more important impact on their overall economic development.How does the uncertainty of economic policy affect the behavioral decisions of commercial banks and thus the credit supply,and ultimately affect the output level of the economy and the level of inflation? This issue is clearly worthy of further discussion in the academic community.In this paper.By constructing the dynamic panel GMM model,the China Economic Policy Uncertainty Index compiled by Baker,Bloom and Davis(2013)is used to test the role of economic policy uncertainty in the bank risk-taking channel in two stages,and compare it from China and the United States.The analysis of the impact of policy uncertainty on the perspective of sub-samples with stateowned and non-state-owned banks.The results show that:(1)Economic policy uncertainty weakens the risk-taking level of Chinese commercial banks under loose monetary policy.However,the sample results show that state-controlled banks tend to be more inclined in the case of higher economic policy uncertainty conditions.Take risks.Similar to the situation in China,the uncertainty of economic policy has weakened the risk-taking level of US commercial banks;(2)From the perspective of segmentation channel testing,policy uncertainty affects the risk of Chinese commercial banks through the capital investment path and financing cost path.The empirical results of the performance are significant.The higher the bank’s capital adequacy ratio and the higher the leverage level,the greater the weakening effect of policy uncertainty on risk exposure.Only the capital input channel in the US data shows significant performance;(3)the policy uncertainty According to the test results of bank credit impact,the banking industry in China and the United States shows a common feature,that is,the increase in economic policy uncertainty will weaken the bank’s credit growth rate.From the test results of the bank’s risk-bearing level affecting the credit growth rate,the US commercial banks show the opposite characteristics of the Chinese commercial banks.The higher the risk-taking level,the higher the credit growth rate,that is,the higher the risk level.The loan is still accelerating,and Chinese commercial banks have a lower credit growth rate when the risk-taking level is higher.