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Liquidity hoarding and bank profitability: The role of economic policy uncertainty

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  • Niu, Jijun

Abstract

We examine the relation between liquidity hoarding and bank profitability in the context of economic policy uncertainty (EPU). Using data on bank liquidity hoarding from Berger et al. (2022), we find that liquidity hoarding is negatively associated with profitability when EPU is low, but positively associated with profitability when EPU is high. Our results hold both in normal and crisis periods, and for banks of different sizes.

Suggested Citation

  • Niu, Jijun, 2024. "Liquidity hoarding and bank profitability: The role of economic policy uncertainty," Finance Research Letters, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:finlet:v:68:y:2024:i:c:s154461232401033x
    DOI: 10.1016/j.frl.2024.106003
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank; Liquidity hoarding; Profitability; Economic policy uncertainty;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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