Asymmetric effects of economic policy uncertainty on Bitcoin’s hedging power

The dampening effect of geopolitical risk and economic policy uncertainty in the linkage between economic complexity and environmental degradation in the G-20

Asymmetric impact of economic policy uncertainty on cryptocurrency market: Evidence from NARDL approach

Motivated by the unprecedented high levels of recent economic policy uncertainty, the current study examines the influence of economic policy uncertainty, institutional quality, and corruption level on the Indian banking stability and the growth of digital financial services. Using the Baker et al.’s economic policy uncertainty index and nonlinear autoregressive distribution lag model on the data set of banking variables from 2004 to 2019, we infer the following findings. The unit root and the structural break tests confirm the presence of structural breaks and mixed order of integrations. Besides, the long-run nonlinear autoregressive distribution lag results substantiate a long-run asymmetric relationship between the explanatory variables (economic policy uncertainty, institutional quality, corruption level) and the outcome variables (digital banking services and banking stability). The study reveals that a 1 percent increase in the economic policy uncertainty increases nonperforming loans (proxy to measure banking stability) by 1.48 percent and decreases Z-score (proxy to measure banking stability) by −1.12 percent. Likewise, a 1 percent increase in policy uncertainty reduces the progress of digital financial services by −1.23 percent in India. In addition, the study also depicts a long-run cointegration between the explanatory and the outcome variables. Overall, the study shows significant evidence that policy uncertainty, corruption, and institutional regulation hampers Indian banking stability and digital growth. The study offers several policy implications to understand the adverse effects of economic policy uncertainty on the Indian banking sector.

We investigate the impact of high-frequency economic policy uncertainty on investments of state-owned and private-owned enterprises (SOEs and POEs), as well as short-, medium- and long-term bank loans in China by employing the mixed-frequency vector autoregression model. Impulse response analysis suggests that monthly economic policy uncertainty is allowed to have heterogeneous effects on investments and bank loans in China. Variance decomposition analysis shows that aggregating monthly economic policy uncertainty into the quarterly level underestimates the influence of economic policy uncertainty in shaping China’s macroeconomy at business cycle frequencies. By further decomposing the SOEs’ investment, we reveal that the effects of economic policy uncertainty on SOEs’ investment are strengthened due to the existence of the injection of the government investment into SOEs. Trade policy uncertainty has a similar impact on China’s investments and bank loans as economic policy uncertainty. The counterfactual analysis shows that the impact of economic policy uncertainty on China’s investments and bank loans is alleviated when the interest rate channel exists. Our major conclusions are insensitive to a series of robustness checks.

Frequent changes in economic policies will bring negative effects on the micro operating environment of banks. In this context, the functional effects of asset securitization create conditions for banks to effectively resist the adverse impact of economic policy uncertainty. In view of this, this paper examines the impact of economic policy uncertainty on the development of asset securitization of banks based on the related chain of “economic policy uncertainty—bank micro behavior change—asset securitization development”. It is found that the increase of economic policy uncertainty significantly promotes the development of bank asset securitization. Further, this paper discusses the internal mechanism of the positive impact, and finds that the adverse impact of economic policy uncertainty on the term mismatch, risk-taking and profitability of banks is an important motivation for banks to develop asset securitization, which confirms the original logic of the article, that is, the adverse impact of economic policy uncertainty on the micro operating environment of banks constitutes a series of motives for the development of bank asset securitization, and fully explains that the functional system of asset securitization can be an effective way for banks to cope with frequent policy changes. Finally, this paper studies the corresponding heterogeneity characteristics, and finds that economic policy uncertainty promotes the development of bank asset securitization, which is more significant in non-listed banks and small and medium-sized banks, because these banks lack sufficient adjustment means to adapt to the unstable political environment, and they need to use the functional system of asset securitization to deal with economic policy uncertainty. Therefore, it has a stronger impetus for the development of asset securitization.This paper holds that the main purpose of developing asset securitization is to deal with the uncertain external environment and its adverse impact on its own microstructure. Under the background that the outbreak of the COVID-19 Epidemic has led to the increase of economic policy adjustment and policy uncertainty, the regulatory authorities should not only continuously improve the institutional space for the effective function of asset securitization, but also pay attention to the “double-edged sword” feature of asset securitization, and strive to create a transparent and fair policy environment and stabilize the bank’s expectation of future policies. The conclusion of this paper expands the research field of bank asset securitization from the perspective of economic policy uncertainty, and deepens the cognition of the effect of economic policy uncertainty on bank behavior, which provides useful enlightenment for making the development strategy of asset securitization scientifically, and stabilizing bank behavior through the development of asset securitization under the background of the frequent adjustment of policies caused by the COVID-19 Epidemic.

Under the general background of negative impacts brought by economic policy uncertainty (EPU), companies have been motivated to foster a good and healthy company image, arouse high attention from investors, and mitigate crises by initiatively releasing their social responsibility report. To explore the impacts of EPU on corporate social responsibility information disclosure, using the sampled data of Chinese A-share listed companies and EPU indexes during 2008-2017, the impacts of EPU on the voluntariness to release social responsibility report, information quality, and future rating were tested; the intermediate mechanisms in the influence of EPU on corporate social responsibility information disclosure were explored; meanwhile, whether the influence of EPU on corporate social responsibility information disclosure varied with voluntariness/compliance, nature of corporate property right, market system environment, and corporate financial performance was explored. Results show that when the EPU is aggravated, the corporate voluntariness to release a social responsibility report is significantly enhanced, including the information disclosure quality, but the expected future social responsibility rating gradually decline. Operation and sales play a partial mediating role in the effects of EPU on facilitating corporate voluntariness to release social responsibility report and improving the disclosure quality, whereas the return on stocks only plays a partial mediating effect in the influence of EPU on the corporate voluntariness to disclose social responsibility report. Meanwhile, the EPU influences corporate social responsibility information disclosure behaviours differently among the samples with different release requirements, natures of property right, market system environments, and financial performances. The conclusions enriches studies on the microeconomic effects generated by economic policy uncertainties and extends studies regarding macro-factors driving companies to make social responsibility information disclosure decisions, thus providing an important reference for the government to formulate or adjust economic policies and for enterprises to execute information disclosure.

Renewable energy in prism of technological innovation and economic uncertainty

Domestic and international effects of economic policy uncertainty on corporate investment and strategic cash holdings: Evidence from Japan

A multi-country analysis of policy uncertainty and Blockchain Innovation

The main purpose of this study is to investigate the effect of economic policy uncertainty on Iranian housing prices using SVAR-X model seasonally in the period of 1383-1388. The results show that the increase in the production gap, economic policy uncertainty and monetary policy have led to an increase, increase and decrease in housing prices in the long run, respectively. The magnitude of the absolute value of the coefficients indicates the importance of the variables affecting housing prices. The results show that monetary policy has the most and the output gap has the least effect on housing prices. The study of variables in the short run also showed that they did not have a significant effect on housing prices. The results of the impulse response also showed that the shock of housing price and the production gap variables will have a significant effect on housing prices; So that the effect of the variable housing shock on the housing price will be maintained in the following years, but the shock effect of the production gap on the housing price will be only two periods. The results of variance decomposition also showed that after ten periods, the share of shocks from large to small are: respectively housing prices (97%), production gap (2.9%), monetary policy (0.07%) and economic policy uncertainty (0.002%).The main purpose of this study is to investigate the effect of economic policy uncertainty on Iranian housing prices using SVAR-X model seasonally in the period of 1383-1388. The results show that the increase in the production gap, economic policy uncertainty and monetary policy have led to an increase, increase and decrease in housing prices in the long run, respectively. The magnitude of the absolute value of the coefficients indicates the importance of the variables affecting housing prices. The results show that monetary policy has the most and the output gap has the least effect on housing prices. The study of variables in the short run also showed that they did not have a significant effect on housing prices. The results of the impulse response also showed that the shock of housing price and the production gap variables will have a significant effect on housing prices; So that the effect of the variable housing shock on the housing price will be maintained in the following years, but the shock effect of the production gap on the housing price will be only two periods. The results of variance decomposition also showed that after ten periods, the share of shocks from large to small are: respectively housing prices (97%), production gap (2.9%), monetary policy (0.07%) and economic policy uncertainty (0.002%).

In this paper, we introduce a weekly index of economic policy uncertainty (EPU) for New Zealand and examine the return and volatility spillovers from New Zealand (local) and US (foreign) EPU on aggregate (NZSE) and sectoral indices of New Zealand stock market. The multivariate VAR (1)-BEKK-GARCH model is employed for this purpose. Overall, our findings suggest that NZ equity sectors and NZSE receive much stronger and more pronounced spillover effects from US EPU compared to the local counterpart (NZ EPU). While the return spillovers from both EPUs are somewhat similar yet limited to just a few sectors, the effect of US EPU on NZ sectors’ volatility outstrips that of the NZ EPU. Furthermore, while the domestically oriented sectors are relatively more vulnerable to NZ EPU, those having export/import concentration with the US are mainly susceptible to US EPU. These findings may be useful to investors seeking sectoral diversification opportunities across New Zealand and the US.

During recent years, global economic uncertainty has risen sharply. The effect of economic policy uncertainty on business activities has become a research hotspot in academia, while previous studies mainly focus on the independent individuals of companies. It is considered that companies are closely related with others from upstream and downstream industries, thereby market transaction costs significantly influence the survival and development of companies, especially in the presence of high economic policy uncertainty. Therefore, this paper explores the impact of economic policy uncertainty on vertical integration from the perspective of supply chain. Vertical integration is defined that companies control adjacent production stages vertically on the supply chain, internalizing transactions between external companies into internal production activities.To be specific, using a sample of listed companies from manufacturing industry during 2000-2018 in China, as well as the vertical integration indicator manually sorted out and calculated, this paper investigates the effect of economic policy uncertainty on vertical integration. The result shows that the higher economic policy uncertainty is, the more inclined companies are to pursue vertical integration. The robustness test and instrumental variable estimation show that this basic result is valid and robust. The heterogeneity analysis conducted at firm-, industry-, and region-level shows that for non-state-owned companies, companies with higher asset specificity, and companies from high-tech industries, more competitive industries, more volatile industries, and the eastern region, the effect of economic policy uncertainty on vertical integration is greater. Further, this paper explores the mechanism about how economic policy uncertainty influences vertical integration. The result shows that economic policy uncertainty significantly decreases the investment intensity of upstream suppliers and downstream distributors, and leads to higher financing constraints, thereby inducing the propensity of vertical integration. More than that, this paper analyzes the reason why economic policy uncertainty has a greater impact on upstream industries from three perspectives: government regulations on the upstream and downstream industries, the proportion of state-owned enterprises distributed in upstream and downstream industries, and the capital intensity of upstream and downstream industries.This paper has the following contributions: From the perspective of supply chain, it explores the impact of economic policy uncertainty on micro enterprise operation; from the perspective of economic policy uncertainty, it enriches the research on the influencing factors of vertical integration, and provides new empirical evidence from China’s manufacturing industry. In addition, from the perspective of supply chain management, this paper provides policy recommendations and management implications for local governments and enterprises to deal with emergencies and the resulting economic policy uncertainty.

How does economic policy uncertainty affect corporate Innovation?–Evidence from China listed companies

This study investigates the influence of economic policy uncertainty on climate change in selected African countries within asymmetric settings. Although previous research has examined the impact of various economic factors on climate change, the asymmetric effects of economic policy uncertainty have not been thoroughly explored, particularly in African countries. We analyze annual data spanning from 1980 to 2017 by utilizing three models: Panel Pooled Mean Group-Autoregressive distributed lag model (ARDL-PMG), Panel Pooled Mean Group-non-linear autoregressive distributed lag model (NARDL-PMG), and Dumitrescu-Hurlin asymmetric causality tests. According to the results of ARDL-PMG estimation, economic policy uncertainty has a detrimental impact on climate change in the long run. However, the NARDL-PMG estimation suggests that a positive shock in economic policy uncertainty negatively affects long-term climate change mitigation. However, a negative shock has a beneficial effect on climate change in the long term. In African nations, positive and negative changes in economic policy uncertainty failed to generate any significant climate change effects in the short run. The results also reveal that both positive and negative shocks in economic policy may cause climate change in a one-way direction. Based on the findings of our study, we recommend that African policymakers implement programs aimed at reducing economic policy uncertainties to help mitigate the effects of climate change.

Based on the data of China manufacturing listed companies from 2006 to 2018, this paper studies the influence of economic policy uncertainty on the competitive effect of cash holding through capital investment. The results show that cash holding has a positive competitive effect, and capital investment plays an intermediary role in the competitive effect. The positive competition effect of cash holding is stronger when the uncertainty of economic policy is low than when the uncertainty of economic policy is high, and the uncertainty of economic policy strengthened the intermediary role of capital investment in the positive competition effect of cash holding. The conclusion of this paper provides a new way to understand the increasing cash holdings of enterprises, and has guiding significance for enterprises to make cash holdings strategy under the uncertainty of different economic policies.