The Effect of Economic Policy Uncertainty on Bank Valuations

Peer reviewed: 
Yes, item is peer reviewed.
Scholarly level: 
Faculty/Staff
Final version published as: 

Zelong He & Jijun Niu (2018) The effect of economic policy uncertainty on bank valuations, Applied Economics Letters, 25:5, 345-347.  https://doi.org/10.1080/13504851.2017.1321832

Date created: 
2017-04-26
Identifier: 
DOI: 10.1080/13504851.2017.1321832
Abstract: 

This paper examines how economic policy uncertainty (EPU) affects bank valuations. Using a large sample of banks over a long period, we find that EPU has a negative effect on bank valuations. One explanation for this result is that EPU reduces bank loan growth, and lower loan growth then leads to lower bank valuations. Consistent with this explanation, we find that the negative effect of EPU is more pronounced for banks with a higher ratio of loans to total assets.

Language: 
English
Document type: 
Article
Rights: 
Rights remain with the authors.
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