ECONOMIC POLICY UNCERTAINTY, GLOBALIZATION AND BANKING STABILITY

Abstract

This paper is accomplished to assess the influence of global economic policy uncertainty and globalization on the stability of the banking system in Asian countries. Although the stabilization of the banking system is a subject of great interest to many researchers, there has yet to be research that simultaneously evaluates the influence of these two factors on its stability. simultaneously evaluates the influence of these two factors on its stability. Based on data from Asian countries and the two-step systematic GMM regression method, the research results show that economic policy uncertainty and globalization erode the banking sectors' stability in Asia. Additionally, the study provides evidence that a country's banking system with a high globalization index will be strengthened in an environment of policy uncertainty. Moreover, financial, economic, and political globalization can reverse the influence of global economic policy uncertainty on the banking system's stability. These findings hold significant policy implications for governments, policymakers, and banking managers.