Country-level cryptocurrency uncertainty and bank cost of capital

Abu Hanifa Md. Noman, Mohammad Abdullah and Larisa Yarovaya

Economics Letters, 2025, vol. 256, issue C

Abstract: This study explores the impact of country-level cryptocurrency uncertainty on bank cost of capital, utilizing data from 63 countries over the period of 2009 to 2023. Our findings indicate that cryptocurrency uncertainty is associated with a reduction in banks’ cost of capital. This result remains robust using alternative proxies and controlling for endogeneity concerns. Additionally, we document that the impact is more pronounced for banks with low market competition, and high interest margin. These results provide valuable insights for policymakers and industry practitioners regarding the implications of cryptocurrency uncertainty on financial institutions.

Keywords: Cryptocurrency uncertainty; Google trends; Cost of equity; Cost of debt; Bank competition; Default risk; Stability (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004513

DOI: 10.1016/j.econlet.2025.112614

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