The impact of economic uncertainty and geopolitical risks on bank credit

Ender Demir and Gamze Ozturk Danisman

The North American Journal of Economics and Finance, 2021, vol. 57, issue C

Abstract: This paper compares the effects of economic uncertainty and geopolitical risks on bank credit growth. Using a sample of 2439 banks from 19 countries for the period of 2010–2019, our findings indicate that economic uncertainty causes a significant decrease in overall bank credit growth while no such significant overall effect of geopolitical risks is documented. Further analysis on loan types shows that the highest negative impact of economic uncertainty is observed on corporate loans. Geopolitical risk, however, dampens consumer and mortgage loans. Additional analyses on bank heterogeneity reveal that the credit behavior of foreign and publicly listed banks are more immune to such risks.

Keywords: Bank credit; World Uncertainty Index; Geopolitical Risk Index; Corporate Loans; Consumer Loans; Mortgage Loans (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000723

DOI: 10.1016/j.najef.2021.101444

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