Economic Policy Uncertainty and Liquidity Hoarding: Econometric Analysis for Indian Banks

IF 1.3 Q1 AREA STUDIES Millennial Asia Pub Date : 2024-05-17 DOI:10.1177/09763996241244894

Madhur Bhatia

引用次数: 0

Abstract

The present study investigates the impact of economic policy uncertainty (EPU) at the national and global levels on a comprehensive measure of bank intermediation, that is, liquidity hoarding (LH) of Indian banks during the 2005 to 2020 period. The findings of the Driscoll–Kraay non-parametric estimator show that Indian banks tend to hoard liquidity in times of economic uncertainty. As per the spillover effects, banks having higher peer LH tend to hoard more liquidity during times of uncertainty compared to lower peer-hoarding banks. Furthermore, the heterogeneity analysis documents that the magnitude of EPU is more destructive for bigger banks, banks with lesser capital bases and liquidity, higher credit risk and public sector banks. Our sensitivity analysis reveals that greater LH is caused by the balance sheet and bank lending channels of credit channel theory. Finally, the study shows that it is imperative to cultivate the growth of financial markets and institutions that can adjust to evolving economic circumstances to lessen the negative effects of EPU.

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经济政策的不确定性与流动性囤积：印度银行的计量经济学分析

本研究调查了国家和全球层面的经济政策不确定性（EPU）对银行中介的综合衡量的影响，即 2005 年至 2020 年期间印度银行的流动性囤积（LH）。Driscoll-Kraay 非参数估计的结果表明，印度银行在经济不确定时期倾向于囤积流动性。根据溢出效应，与同业囤积较少的银行相比，同业囤积较多的银行在不确定时期倾向于囤积更多的流动性。此外，异质性分析表明，EPU 的幅度对大型银行、资本基础和流动性较差的银行、信用风险较高的银行和公共部门银行更具破坏性。我们的敏感性分析表明，信贷渠道理论中的资产负债表渠道和银行贷款渠道导致了更大的 LH。最后，研究表明，必须培育能够适应不断变化的经济环境的金融市场和机构，以减少 EPU 的负面影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Millennial Asia AREA STUDIES-

CiteScore

4.50

自引率

12.50%

发文量

期刊介绍： Millennial Asia: An International Journal of Asian Studies is a multidisciplinary, refereed biannual journal of the Association of Asia Scholars (AAS)–an association of the alumni of the Asian Scholarship Foundation (ASF). It aims to encourage multifaceted, multidisciplinary and interdisciplinary research on Asia, in order to understand its fast changing context as a growth pole of global economy. By providing a forum for Asian scholars situated globally, it promotes dialogue between the global academic community, civil society and policy makers on Asian issues. The journal examines Asia on a regional and comparative basis, emphasizing patterns and tendencies that go beyond national borders and are globally relevant. Modern and contemporary Asia has witnessed dynamic transformations in cultures, societies, economies and political institutions, among others. It confronts issues of collective identity formation, ecological crisis, rapid economic change and resurgence of religion and communal identifies while embracing globalization. An analysis of past experiences can help produce a deeper understanding of contemporary change. In particular, the journal is interested in locating contemporary changes within a historical perspective, through the use of interdisciplinary and multidisciplinary approaches. This way, it hopes to promote comparative studies involving Asia’s various regions. The journal brings out both thematic and general issues and the thrust areas are: Asian integration, Asian economies, sociology, culture, politics, governance, security, development issues, arts and literature and any other such issue as the editorial board may deem fit. The core fields include development encompassing agriculture, industry, regional trade, social sectors like health and education and development policy across the region and in specific countries in a comparative perspective.