Economic policy uncertainty, bank deposits, and liability structure

Abstract

This study used data from 2009 to 2017 to investigate the impact of economic policy uncertainty (EPU) on the liability side of Chinese commercial banks. The results show that the increase in EPU leads commercial bank customers to shift from term to demand deposits, which shortens deposit maturity and triggers commercial banks' liquidity-hoarding behavior. Our research provides insights into the motives and strategies behind commercial banks' liquidity hoarding and offers implications for risk management, monetary policy, and systemic financial risk prevention.