Studies from Nankai University Further Understanding of Investment (Bank Liquidity Hoarding and Bank Systemic Risk: the Moderating Effect of Economic Policy Uncertainty): Investment

2023 DEC 29 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Current study results on Investment have been published. According to news reporting from Tianjin, People’s Republic of China, by NewsRx journalists, research stated, “In this article, we use panel data from 457 listed banks in 20 countries to investigate the impact of bank liquidity hoarding on systemic risk in the banking sector and discuss it under the condition of economic policy uncertainty (EPU). Empirical evidence suggests that when banks’ liquidity hoarding increases, their systemic risk contribution decreases significantly.”

The news correspondents obtained a quote from the research from Nankai University, “Furthermore, we demonstrate that bank liquidity hoarding works through the channel of improving bank operational stability and reducing bank asset risk. In addition, during a period of high EPU, bank liquidity hoarding has a more significant effect on reducing systemic risk. Our results remain stable after a battery of robustness checks. Heterogeneity analysis indicates that the role of bank liquidity hoarding in reducing systemic risk is more significant in larger banks and banks in developed countries. Moreover, this effect is particularly pronounced when there is an accommodative monetary policy environment. Our study has some important implications for policymakers and regulators. Previous research suggests that policymakers may consider encouraging the banking sector to actively create liquidity instead of hoarding it, as this could lead to higher economic output. However, from the perspective of financial stability, banks’ liquidity hoarding can help reduce their systemic risk contribution, especially in periods of high external uncertainty.”

According to the news reporters, the research concluded: “Therefore, policymakers need to evaluate bank liquidity hoarding behaviour more comprehensively, and strike a balance between promoting economic growth and ensuring financial system stability to maximize overall welfare.”

This research has been peer-reviewed.

For more information on this research see: Bank Liquidity Hoarding and Bank Systemic Risk: the Moderating Effect of Economic Policy Uncertainty. Pacific-Basin Finance Journal, 2023;82. Pacific-Basin Finance Journal can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands.

Our news journalists report that additional information may be obtained by contacting Yu Wang, Nankai University, School of Finance, 38 Tongyan Rd, Tianjin 300350, People’s Republic of China.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.pacfin.2023.102189. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)