The impact of economic policy uncertainty on banks' non-interest income activities

Whelsy Boungou and Charles Mawusi

International Economics, 2022, issue 169, 89-97

Abstract: This paper investigates how banks adjust their business model amid rising global economic uncertainty. Specifically, we analyze the effect of economic policy uncertainty (EPU) on banks' non-interest income activities, using a large panel dataset of 3913 banks operating in 9 countries over the period 2009–2018. We find no statistically significant effect of EPU on banks’ net non-interest income (NNII). Further analysis shows that the lack of impact on NNII is due to a reduction in gross non-interest income which was offset by a decrease in gross non-interest expenses. Our results also suggest that the likelihood of banks to diversify income amid high EPU is conditional on the negative interest rate environment.

Keywords: Economic policy uncertainty; Bank diversification; Negative interest rate environment (search for similar items in EconPapers)
JEL-codes: D81 E65 G21 G28 (search for similar items in EconPapers)
Date: 2022
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Journal Article: The impact of economic policy uncertainty on banks' non-interest income activities (2022)
Working Paper: The impact of economic policy uncertainty on banks' non-interest income activities (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiie:2022-q2-169-7

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