Liquidity hoarding and bank profitability: The role of economic policy uncertainty

Jijun Niu

Finance Research Letters, 2024, vol. 68, issue C

Abstract: We examine the relation between liquidity hoarding and bank profitability in the context of economic policy uncertainty (EPU). Using data on bank liquidity hoarding from Berger et al. (2022), we find that liquidity hoarding is negatively associated with profitability when EPU is low, but positively associated with profitability when EPU is high. Our results hold both in normal and crisis periods, and for banks of different sizes.

Keywords: Bank; Liquidity hoarding; Profitability; Economic policy uncertainty (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:68:y:2024:i:c:s154461232401033x

DOI: 10.1016/j.frl.2024.106003

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