The impact of economic uncertainty and geopolitical risks on bank credit

By Ender Demir, G. Danisman. The North American journal of economics and finance, 2021

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Abstract This paper compares the effects of economic uncertainty and geopolitical risks on bank credit growth. Using a sample of 2,439 banks from 19 countries for the period of 2010-2019, our findings indicate that economic uncertainty causes a decrease in overall bank credit growth while no effect of geopolitical risks is documented. Further analysis on loan types shows that while the highest impact of economic uncertainty is observed on corporate loans, geopolitical risk dampens consumer and mortgage loans. Additional analyses on bank heterogeneity reveal that the credit behavior of foreign and publicly listed banks are immune to such risks.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/137ce334fb6b239a5c6e9dbd1b7122f69d14644e