The impact of economic policy uncertainty on banks' non-interest income activities

Whelsy Boungou and Charles Mawusi
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Charles Mawusi: BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper investigates how banks adjust their business model amid rising global economic uncertainty. Specifically, we analyze the effect of economic policy uncertainty (EPU) on banks' non-interest income activities, using a large panel dataset of 3913 banks operating in 9 countries over the period 2009–2018. We find no statistically significant effect of EPU on banks' net non-interest income (NNII). Further analysis shows that the lack of impact on NNII is due to a reduction in gross non-interest income which was offset by a decrease in gross non-interest expenses. Our results also suggest that the likelihood of banks to diversify income amid high EPU is conditional on the negative interest rate environment.

Keywords: Economic policy uncertainty; Bank diversification; Negative interest rate environment (search for similar items in EconPapers)
Date: 2022-05-01
Note: View the original document on HAL open archive server: https://hal.science/hal-03520683
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Citations: View citations in EconPapers (2)

Published in International Economics, 2022, 169, pp.89-97. ⟨10.1016/j.inteco.2021.12.003⟩

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Journal Article: The impact of economic policy uncertainty on banks' non-interest income activities (2022)
Journal Article: The impact of economic policy uncertainty on banks' non-interest income activities (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03520683

DOI: 10.1016/j.inteco.2021.12.003

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