BHC brilliance in the fog of uncertainty: Illuminating trends in bank performance

Minh N. Nguyen (), Hung M. Pham (), Anh Phan (), Ahmed W. Alam () and Dung V. Tran ()
Additional contact information
Minh N. Nguyen: Banking Academy of Vietnam
Hung M. Pham: Banking Academy of Vietnam
Anh Phan: Banking Academy of Vietnam
Ahmed W. Alam: Kean University
Dung V. Tran: Banking Academy of Vietnam

Journal of Economics and Finance, 2024, vol. 48, issue 2, No 9, 437-461

Abstract: Abstract This paper investigates the impact of economic policy uncertainty (EPU) on U.S. banks' performance over the period 2001:Q1-2021:Q1. The empirical results indicate that EPU exerts an adverse influence on banks’ return on assets (ROA), but this effect diminishes with the increasing level of bank ROA. The baseline result remains resilient to using state-level EPU as an alternative measure of policy uncertainty. In addition, the findings survive a battery of robustness and endogeneity tests, including instrumental variable (IV) regressions. It is observed that EPU exhibits a differential impact on banks' ROA during the 2008 financial crisis and the COVID-19 pandemic. Finally, it is found that while the deterring effect of EPU is more pronounced for banks with greater earning opacity, it is significantly mitigated by a bank’s search for yield, managerial ability, and diversified business models.

Keywords: Economic policy uncertainty; Bank performance; Managerial ability; Financial crisis; COVID-19 pandemic (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s12197-024-09664-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:jecfin:v:48:y:2024:i:2:d:10.1007_s12197-024-09664-z

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-024-09664-z

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().