Policy uncertainty, market discipline and bank stability: Investigation from supply-side effect

The paper "Policy uncertainty, market discipline and bank stability: Investigation from supply-side effect" uses the most up-to-date data from U.S. banks to investigate the impact of economic policy uncertainty (EPU) on bank stability. The results reveal that elevated uncertainty makes banks more fragile and prone to crash events through profitability erosion, capital buffer, and exacerbating return volatility. This negative impact of EPU is more pronounced for highly risky and large-size banks.