Economic uncertainty and bank risk: Evidence from emerging economies

Ji Wu, Yao Yao, Minghua Chen and Bang Jeon

Journal of International Financial Markets, Institutions and Money, 2020, vol. 68, issue C

Abstract: This paper examines the impact of economic uncertainty on the risk of banks, which has only been underexplored in extant literature so far. Using bank-level panel data of more than 1500 banks in 34 emerging economies during the period of 2000–2016, we find consistent and robust evidence that bank risk increases as the level of economic uncertainty increases. We also investigate possible mechanisms whereby economic uncertainty is translated into bank risk, and present evidence that the uncertainty-bank risk nexus is more attributable to the option value of waiting, search-for-yield strategies and bank herding behaviors than various demand-side effects.

Keywords: Economic uncertainty; Bank risk; Emerging economies (search for similar items in EconPapers)
JEL-codes: G15 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443120301268
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Economic uncertainty and bank risk: Evidence from emerging economies (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:68:y:2020:i:c:s1042443120301268

DOI: 10.1016/j.intfin.2020.101242

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Catherine Liu ().