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Uncertainty and Credit: The Chicken or the Egg Causality Dilemma.
- Source :
- Emerging Markets Finance & Trade; 2024, Vol. 60 Issue 11, p2560-2578, 19p
- Publication Year :
- 2024
-
Abstract
- This paper seeks to explore whether bank credit (BC) contains useful information for mitigating economic policy uncertainty (EPU). The results of the bootstrap rolling-window test show that EPU is an effective channel for triggering BC. Additionally, it finds a feedback effect of BC on EPU, indicating that BC is a favorable tool for predicting EPU. Rising policy uncertainty leads banks to adopt aggressive or conservative credit strategies, which further increases policy adjustments. This circular relationship seems to be caught in a chicken or egg dilemma, demonstrating the importance of the government and the banking system in maintaining economic stability. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 1540496X
- Volume :
- 60
- Issue :
- 11
- Database :
- Complementary Index
- Journal :
- Emerging Markets Finance & Trade
- Publication Type :
- Academic Journal
- Accession number :
- 179084864
- Full Text :
- https://doi.org/10.1080/1540496X.2024.2318299