Economic policy uncertainty, agency problem, and funding structure: Evidence from U.S. banking industry

Dung Tran, M. Kabir Hassan, Ahmed W. Alam, Luca Pezzo and Mariani Abdul-Majid

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: We empirically examine the impact of economic policy uncertainty (EPU) on banks’ funding structure (FUD). Using an extensive dataset of U.S. bank holding companies, we find that high policy uncertainty strengthens banks’ FUD. For banks with a pre-existing low FUD, an increase in EPU raises FUD. However, for banks with a pre-existing high FUD, the relationship between EPU and FUD becomes negative and economically significant. Considering the lack of relevant studies, our paper contributes to the literature and provides implications for policymakers and practitioners in the banking industry.

Keywords: Economic policy uncertainty; Bank funding structure; Agency problem (search for similar items in EconPapers)
JEL-codes: G21 G28 G34 G38 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s027553192100091x

DOI: 10.1016/j.ribaf.2021.101470

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