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How do banks manage their capital during uncertainty?

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  • Dung Tran
  • Cuong Nguyen
  • Huy Viet Hoang

Abstract

The paper investigates the impact of EPU on bank capital in the U.S. from 2001–2020. The empirical results show that banks hold more capital when encountering high EPU. This effect increases with the bank size, meaning that the larger banks hold more capital during increasing EPU. Interestingly, further analyses reveal that worst-capitalized banks decrease their capital ratio when EPU elevates. The results are robust under different econometric methods and alternative proxies of uncertainty and bank capital.

Suggested Citation

  • Dung Tran & Cuong Nguyen & Huy Viet Hoang, 2023. "How do banks manage their capital during uncertainty?," Applied Economics Letters, Taylor & Francis Journals, vol. 30(2), pages 195-199, January.
    • Handle: RePEc:taf:apeclt:v:30:y:2023:i:2:p:195-199
    DOI: 10.1080/13504851.2021.1980488
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    Cited by:

    1. Minh N. Nguyen & Hung M. Pham & Anh Phan & Ahmed W. Alam & Dung V. Tran, 2024. "BHC brilliance in the fog of uncertainty: Illuminating trends in bank performance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(2), pages 437-461, June.

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