The impact of policy uncertainty and risk taking on the credit resource allocation of urban commercial banks

Jianfeng Yao and Jianfei Fan

International Review of Economics & Finance, 2025, vol. 97, issue C

Abstract: This paper investigates the impact of policy uncertainty and risk-taking on the credit resource allocation of urban commercial banks, using data from 30 urban commercial banks over the period 2012–2022 as a sample. The empirical results show that policy uncertainty reduces the allocation of credit resources by urban commercial banks; risk-taking is positively correlated with the allocation of credit resources by urban commercial banks; capital adequacy ratio plays an intermediary role in the relationship between risk-taking and credit resource allocation; the impacts of policy uncertainty and risk-taking on credit resource allocation among urban commercial banks with different equity natures exhibit variabilities. Specifically, policy uncertainty has a more pronounced effect on credit resource allocation in urban commercial banks controlled by local governments, whereas risk-taking exerts a more significant influence on credit resource allocation in those controlled by non-local governments; the impact of risk-taking on the allocation of credit resources by urban commercial banks exhibits a threshold effect, showing different characteristics as the size of the bank changes.

Keywords: Policy uncertainty; Risk-taking; Credit resource allocation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024007585

DOI: 10.1016/j.iref.2024.103766

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