Economic policy uncertainty and bank stability: Threshold effect of institutional quality and competition

Shabir, Mohsin; Jiang, Ping; Bakhsh, Satar; Zhao, Zhijun

doi:10.1016/j.pacfin.2021.101610

Cited by 65 publications

(59 citation statements)

References 144 publications

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“…Therefore, for a comprehensive analysis, we employ a series of alternative bank stability proxies in this study. Firstly, we followed the earlier studies of Laeven and Levine (2009) , Elnahass et al (2021) , and Shabir et al (2021) and used the Z-score as the proxy for bank default risk. The Z-score determines the bank's distance to insolvency ( Roy, 1952 ), and it is assumed to be an unbiased bank risk indicator based on accounting data.…”

Section: Methodsmentioning

confidence: 99%

COVID-19 pandemic impact on banking sector: A cross-country analysis

Shabir

Jiang

Wang

et al. 2023

Journal of Multinational Financial Management

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Section: Methodsmentioning

confidence: 99%

COVID-19 pandemic impact on banking sector: A cross-country analysis

Shabir

Jiang

Wang

et al. 2023

Journal of Multinational Financial Management

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“…Furthermore, we extend our basic analysis to examine how bank characteristics shape the effects of COVID-19 shocks on bank performance. Current studies have shown that bank features such as size, capitalization, liquidity, and diversification have significantly influenced bank performance ( Altunbas et al, 2012 ; Shabir et al, 2021 ). Therefore, to estimate the heterogeneity across the bank, we include the interaction terms of bank size, capitalization, liquidity, and diversification with COIVD-19 in our main regression model.…”

Section: Resultsmentioning

confidence: 99%

Coronavirus pandemic impact on bank performance

Xiazi

Shabir

2022

Front. Psychol.

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This study examines the effects of the coronavirus (COVID-19) epidemic on the performance of the banking sector. Our sample consists of 1,575 banks in 85 countries from 2020Q1 to 2021Q4. The findings demonstrate that the COVID-19 outbreak has significantly decreased bank performance. Moreover, the adverse impact of COVID-19 on the bank’s performance depends on the bank’s and country-specific aspects. The adverse effect of the COVID-19 outbreak on bank performance is higher in smaller, undercapitalized, and less diversified banks. At the same time, a better institutional environment and financial development have significantly increased the strength and resilience of banks. The results are quite robust to using the alternative bank performance measures and estimation techniques. These findings provide practical implications for regulators and policymakers in the face of unprecedented uncertainty caused by COVID-19 epidemics.

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“…However, cross-country data for most of these variables is scarce; hence, most scholars proposed the banks Z-score as a proxy of financial stability. Higher Z-score indicates a low probability for a system to become unstable [7,31,52,55]. Consequently, this research used a composite index for financial inclusion and Z-score for financial stability as proxy variables.…”

Section: Methodsmentioning

confidence: 99%

“…The financial inclusion index has a significant positive relationship with stability (Z-score) and a negative effect on the deposit growth rates and nonperforming loan ratio, indicating that an inclusive financial system contributes to more stable deposits and safe loans and, thereby, stable banks [51]. Economic policy uncertainty has adverse consequences on bank stability in all countries irrespective of their level of development, advocating the importance of institutional quality [52].…”

Section: Empirical Literaturementioning

confidence: 99%

Causality between Financial Inclusion, Financial Stability and Economic Growth in Sub-Saharan Africa

Jima

Makoni

2023

Sustainability

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Financial inclusion has become a policy agenda for financial stability and sustainable economic growth for the developing world. However, there seems to be a lack of consensus across the literature on the relationships between financial inclusion, financial stability and economic growth. Given the divergent views, this paper aims to examine the causal relationships between financial inclusion, financial stability and economic growth in the Sub-Saharan African (SSA) countries. In this study, panel data were used for twenty six selected SSA economies and a principal component analysis (PCA) was applied to construct a composite index for financial inclusion. In addition, an autoregressive distributed lags (ARDL) cointegration test was applied to examine the short- and long-run relationships between the variables of interest. Separate and joint Granger causality tests were used to assess the direction of causality. The result of the study indicated that there are both short-run and long-run relationships between financial inclusion, financial stability and economic growth in the SSA countries. Moreover, the Granger causality tests revealed that there are separate two-way causalities and joint uni-directional causalities, indicating complementarity between these variables. It is, therefore, necessary for policy makers, regulators and financial sector advisors to follow a holistic approach while developing and implementing policies and strategies that promote financial inclusion in order to attain sustainable economic growth in the region.

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Economic policy uncertainty and bank stability: Threshold effect of institutional quality and competition

Cited by 65 publications

References 144 publications

COVID-19 pandemic impact on banking sector: A cross-country analysis

COVID-19 pandemic impact on banking sector: A cross-country analysis

Coronavirus pandemic impact on bank performance

Causality between Financial Inclusion, Financial Stability and Economic Growth in Sub-Saharan Africa

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