The Impact of Policy Uncertainty and Economic Freedom on Bank Stability: Global Evidence

Buu Kiem Dang, Hien Nguyen Anh and Thi Van Trinh Pham
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Buu Kiem Dang: Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Vietnam
Hien Nguyen Anh: Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Vietnam
Thi Van Trinh Pham: Faculty of Finance and Accounting, Saigon University, Ho Chi Minh City, Vietnam

Journal of International Commerce, Economics and Policy (JICEP), 2025, vol. 16, issue 01, 1-24

Abstract: The objective of this study is to evaluate the impacts of policy uncertainty and economic freedom on the stability of national banking systems worldwide. The research sample includes 165 countries and covers the period from 1997 to 2021. The study employs panel data estimation methods including the fixed effects model, random effects model, Driscoll–Kraay standard errors approach, and system GMM. The findings consistently show that policy uncertainties, including world policy uncertainty, trade policy uncertainty, and global economic policy uncertainty, negatively affect bank stability. Additionally, economic freedom policies can help mitigate the negative impact of policy uncertainty.

Keywords: Policy uncertainty; world policy uncertainty; trade policy uncertainty; global economic policy uncertainty; economic freedom; bank stability (search for similar items in EconPapers)
JEL-codes: G18 G21 G28 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S179399332550005X

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