Does higher policy uncertainty lead to higher financial risk for sure? This study shows an opposite evidence. Based on the sample of 16 listed banks from 2011 to 2020 in China, we find that economic policy uncertainty has a significantly large negative impact on the bank systemic risk, and the...

We study the impact of China’s 2013 implementation of Basel III on bank risk-taking and its responses to monetary policy shocks using confidential loan-level data from a large Chinese bank. Guided by theory, we use a difference-in-difference identification, exploiting cross-sectional...

We present evidence that tightened bank capital requirements after China implemented the Basel III capital regulations in 2013 have reduced bank risk-taking following expansionary monetary policy shocks. Under the new regulations, a bank can boost its effective capital adequacy ratio (CAR) by...

This paper builds a banking DSGE model with endogenous loan-to-value ratios which capture complex relationships between banks and firms. Reflecting the relationship between banks and enterprises, the loan-to-value ratio for state-owned enterprises is endogenously greater than that for private...