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Oil Price Shocks and Bank Risk around the World

Author

Listed:
  • Yi Jin
  • Pengxiang Zhai
  • Zhaobo Zhu

Abstract

This paper provides global evidence that oil price shocks have significant impacts on bank risk. Specifically, all three oil shocks, including oil supply shocks, aggregate demand shocks, and oil specific demand shocks, have positive impacts on bank risk. In particular, oil specific demand shocks have different impacts on bank risk in oil-importing versus oil-exporting countries and in normal times versus the financial crisis period. Moreover, we find that interest rate spread could significantly explain the impacts of oil shocks on bank risk for oil-exporting countries during normal times. Our main results remain valid in various robustness tests.This study provides important practical implications for policy makers, banks, and investors around the world.

Suggested Citation

  • Yi Jin & Pengxiang Zhai & Zhaobo Zhu, 2022. "Oil Price Shocks and Bank Risk around the World," The Energy Journal, , vol. 43(1_suppl), pages 1-28, June.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:1_suppl:p:1-28
    DOI: 10.5547/01956574.43.SI1.yjin
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    References listed on IDEAS

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    Cited by:

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    2. Fathi Mohamed Bouzidi & Aida Arbi Nefzi & Mohammed Al Yousif, 2024. "Impact of International Oil Price Shocks and Inflation on Bank Efficiency and Financial Stability: Evidence from Saudi Arabian Banking Sector," JRFM, MDPI, vol. 17(12), pages 1-28, November.
    3. Ren, Xiaohang & Fu, Chenjia & Jin, Yi, 2025. "Climate risk perception and oil financialization in China: Evidence from a time-varying Granger model," Research in International Business and Finance, Elsevier, vol. 74(C).

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