부산대학교 도서관

This paper investigates the impact of economic policy uncertainty (EPU) on U.S. banks' performance over the period 2001:Q1-2021:Q1. The empirical results indicate that EPU exerts an adverse influence on banks’ return on assets (ROA), but this effect diminishes with the increasing level of bank ROA. The baseline result remains resilient to using state-level EPU as an alternative measure of policy uncertainty. In addition, the findings survive a battery of robustness and endogeneity tests, including instrumental variable (IV) regressions. It is observed that EPU exhibits a differential impact on banks' ROA during the 2008 financial crisis and the COVID-19 pandemic. Finally, it is found that while the deterring effect of EPU is more pronounced for banks with greater earning opacity, it is significantly mitigated by a bank’s search for yield, managerial ability, and diversified business models.