FRIC/Finance Seminar with Allen N. Berger, University of South Carolina
FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with Allen N. Berger, University of South Carolina.
Allen N. Berger will present:
Economic Policy Uncertainty and Bank Liquidity Creation
ABSTRACT
We investigate an important channel through which economic policy uncertainty (EPU) affects the economy – bank liquidity creation. Using over one million U.S. bank-quarter observations from 1985:Q2 to 2016:Q4, we find that EPU decreases total, asset-side, and off-balance sheet-side bank liquidity creation, partially offset by increased liability-side liquidity creation. Findings suggest EPU likely harms the economy as it results in more funds flowing into the banking system, but fewer flowing out for productive purposes. Results hold across bank size classes, but are somewhat weaker during financial crises, possibly because of favorable government treatment during crises that helps shield them from uncertainty.
Location:
Solbjerg Plads 3, 2000 Frederiksberg
Room: SPs13