Politická ekonomie X:X | DOI: 10.18267/j.polek.1495

Financial Development in Uncertain Economies: A Pathway to Sustainability

Xin Ling, Muhammad Atif Khan ORCID..., Hammad Qadeer
Xin Ling, School of Economics of Beijing Wuzi University, Beijing, China
Muhammad Atif Khan (Corresponding author), Department of Commerce, Faculty of Management Sciences, University of Kotli, City Kotli, Azad Jammu and Kashmir 11100, Pakistan
Hammad Qadeer, School of Accounting, Zhongnan University of Economics and Law, Wuhan, China

This study is the first to explore the effect of Economic Policy Uncertainty (EPU) on multidimensional financial development. Using data from 22 countries over 20 years (2002-2021) and employing fixed effects regression and two-step dynamic system GMM estimators, the results reveal a significant negative impact of EPU on financial development. This adverse effect spans both key dimensions: financial institutions and financial markets development. The analysis further highlights how EPU hampers key dimensions of financial institutions and markets\' performance - depth, access, and efficiency. Importantly, the study highlights the positive moderating role of institutional quality, which mitigates EPU\'s negative impact, reinforcing its importance in enhancing financial resilience. Furthermore, this study differentiates between elevated and mild EPU regimes, highlighting the capacity of the latter to significantly hinder financial development. These findings underscore the vital role of strong institutions in stabilizing financial systems amid policy uncertainty.

Keywords: Economic policy uncertainty, financial development, institutional quality

Vloženo: 27. srpen 2024; Revidováno: 20. leden 2025; Přijato: 27. leden 2025; Zveřejněno online: 12. listopad 2025 

Stáhnout citaci
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Zobrazit celý článek

    Reference

    1. Ahmed, F., Kousar, S., Pervaiz, A., Shabbir, A. (2022). Do institutional quality and financial development affect sustainable economic growth? Evidence from South Asian countries. Borsa Istanbul Review, 22(1), 189-196. https://doi.org/https://doi.org/10.1016/j.bir.2021.03.005 Přejít k původnímu zdroji...
    2. Al-Thaqeb, S. A., Algharabali, B. G. (2019). Economic policy uncertainty: A literature review. The Journal of Economic Asymmetries, 20, e00133. https://doi.org/https://doi.org/10.1016/j.jeca.2019.e00133 Přejít k původnímu zdroji...
    3. Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., Wacziarg, R. (2003). Fractionalization. Journal of Economic Growth, 8(2), 155-194. https://doi.org/10.1023/A:1024471506938 Přejít k původnímu zdroji...
    4. Ali, K., Hongbing, H., Liew, C. Y., Jianguo, D. (2023). Governance perspective and the effect of economic policy uncertainty on financial stability: evidence from developed and developing economies. Economic Change and Restructuring, 56(3), 1971-2002. https://doi.org/10.1007/s10644-023-09497-6 Přejít k původnímu zdroji...
    5. Almustafa, H., Jabbouri, I., Kijkasiwat, P. (2023). Economic Policy Uncertainty, Financial Leverage, and Corporate Investment: Evidence from U.S. Firms. Economies, 11(2). Přejít k původnímu zdroji...
    6. Aman, A., Anwar, S., Khan, M. A., Haddad, H., Al-Ramahi, N. M., Khan, M. A. (2024). Economic policy uncertainty and financial system efficiency. Heliyon, 10(10), e31384. https://doi.org/https://doi.org/10.1016/j.heliyon.2024.e31384 Přejít k původnímu zdroji...
    7. Antonakakis, N., Chatziantoniou, I., Filis, G. (2013). Dynamic co-movements of stock market returns, implied volatility and policy uncertainty. Economics Letters, 120(1), 87-92. https://doi.org/https://doi.org/10.1016/j.econlet.2013.04.004 Přejít k původnímu zdroji...
    8. Arellano, M., Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297. https://doi.org/10.2307/2297968 Přejít k původnímu zdroji...
    9. Ashraf, B. N., Shen, Y. (2019). Economic policy uncertainty and banks' loan pricing. Journal of Financial Stability, 44, 100695. https://doi.org/https://doi.org/10.1016/j.jfs.2019.100695 Přejít k původnímu zdroji...
    10. Bahmani-Oskooee, M., Maki-Nayeri, M. (2019). Asymmetric Effects of Policy Uncertainty on the Demand for Money in the United States. Journal of Risk and Financial Management, 12(1). Přejít k původnímu zdroji...
    11. Baker, S. R., Bloom, N., Davis, S. J. (2016). Measuring Economic Policy Uncertainty*. The Quarterly Journal of Economics, 131(4), 1593-1636. https://doi.org/10.1093/qje/qjw024 Přejít k původnímu zdroji...
    12. Balke, N. S., Zeng, Z. (2013). Credit demand, credit supply, and economic activity. 13(1), 643-680. https://doi.org/doi:10.1515/bejm-2012-0116 (The B.E. Journal of Macroeconomics) Přejít k původnímu zdroji...
    13. Barraza, S., Civelli, A. (2020). Economic policy uncertainty and the supply of business loans. Journal of Banking & Finance, 121, 105983. https://doi.org/https://doi.org/10.1016/j.jbankfin.2020.105983 Přejít k původnímu zdroji...
    14. Beck, R., Jakubik, P., Piloiu, A. (2015). Key Determinants of Non-performing Loans: New Evidence from a Global Sample. Open Economies Review, 26(3), 525-550. https://doi.org/10.1007/s11079-015-9358-8 Přejít k původnímu zdroji...
    15. Bemanke, B., Gertler, M. (1989). Agency costs, net worth, and business fluctuations. American Economic Review, 79(1), 14-31.
    16. Blundell, R., Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of econometrics, 87(1), 115-143. https://doi.org/https://doi.org/10.1016/S0304-4076(98)00009-8 Přejít k původnímu zdroji...
    17. Bordo, M. D., Duca, J. V., Koch, C. (2016). Economic policy uncertainty and the credit channel: Aggregate and bank level U.S. evidence over several decades. Journal of Financial Stability, 26, 90-106. https://doi.org/https://doi.org/10.1016/j.jfs.2016.07.002 Přejít k původnímu zdroji...
    18. Brown, S., Hillegeist, S. A. (2007). How disclosure quality affects the level of information asymmetry. Review of Accounting Studies, 12(2), 443-477. https://doi.org/10.1007/s11142-007-9032-5 Přejít k původnímu zdroji...
    19. Büttner, N., Grimm, M., Soubeiga, S. (2022). Political instability and households' investment behavior: Evidence from Burkina Faso. Journal of Comparative Economics, 50(2), 350-368. https://doi.org/https://doi.org/10.1016/j.jce.2021.11.003 Přejít k původnímu zdroji...
    20. Cai, D., Zhang, T., Han, K., Liang, J. (2022). Economic Policy Uncertainty Shocks and Chinese Stock Market Volatility: An Empirical Analysis with SVAR. Complexity, 2022, 6944318. https://doi.org/10.1155/2022/6944318 Přejít k původnímu zdroji...
    21. Chi, Q., Li, W. (2017). Economic policy uncertainty, credit risks and banks' lending decisions: Evidence from Chinese commercial banks. China Journal of Accounting Research, 10(1), 33-50. https://doi.org/https://doi.org/10.1016/j.cjar.2016.12.001 Přejít k původnímu zdroji...
    22. Cooray, A. (2011). The role of the government in financial sector development. Economic Modelling, 28(3), 928-938. https://doi.org/https://doi.org/10.1016/j.econmod.2010.11.001 Přejít k původnímu zdroji...
    23. Danisman, G. O., Ersan, O., Demir, E. (2020). Economic policy uncertainty and bank credit growth: Evidence from European banks. Journal of Multinational Financial Management, 57-58, 100653. https://doi.org/https://doi.org/10.1016/j.mulfin.2020.100653 Přejít k původnímu zdroji...
    24. Gholipour, H. F. (2019). The effects of economic policy and political uncertainties on economic activities. Research in International Business and Finance, 48, 210-218. https://doi.org/https://doi.org/10.1016/j.ribaf.2019.01.004 Přejít k původnímu zdroji...
    25. Gilchrist, S., Sim, J. W., Zakrajšek, E. (2013). Misallocation and financial market frictions: Some direct evidence from the dispersion in borrowing costs. Review of Economic Dynamics, 16(1), 159-176. https://doi.org/https://doi.org/10.1016/j.red.2012.11.001 Přejít k původnímu zdroji...
    26. Gozgor, G., Demir, E., Belas, J., Yesilyurt, S. (2019). Does economic uncertainty affect domestic credits? an empirical investigation. Journal of International Financial Markets, Institutions and Money, 63, 101147. https://doi.org/https://doi.org/10.1016/j.intfin.2019.101147 Přejít k původnímu zdroji...
    27. Guedhami, O., Mansi, S., Reeb, D., Yasuda, Y. (2021). Economic policy uncertainty and allocative distortions. Journal of Financial Stability, 56, 100923. https://doi.org/https://doi.org/10.1016/j.jfs.2021.100923 Přejít k původnímu zdroji...
    28. Haschka, R. E., Herwartz, H., Struthmann, P., Tran, V. T., Walle, Y. M. (2022). The joint effects of financial development and the business environment on firm growth: Evidence from Vietnam. Journal of Comparative Economics, 50(2), 486-506. https://doi.org/https://doi.org/10.1016/j.jce.2021.11.002 Přejít k původnímu zdroji...
    29. Jia, Z., Mehta, A. M., Qamruzzaman, M., Ali, M. (2021). Economic Policy uncertainty and financial innovation: Is there any affiliation? Frontiers in psychology, 12, 631834. Přejít k původnímu zdroji...
    30. Karadima, M., Louri, H. (2021). Economic policy uncertainty and non-performing loans: The moderating role of bank concentration. Finance Research Letters, 38, 101458. https://doi.org/https://doi.org/10.1016/j.frl.2020.101458 Přejít k původnímu zdroji...
    31. Khan, M. A., Gu, L., Khan, M. A., Bhatti, M. I. (2022). Institutional perspective of financial sector development: A multidimensional assessment. Economic Systems, 46(4), 101041. https://doi.org/https://doi.org/10.1016/j.ecosys.2022.101041 Přejít k původnímu zdroji...
    32. Khan, M. A., Gu, L., Khan, M. A., Oláh, J. (2020). Natural resources and financial development: The role of institutional quality. Journal of Multinational Financial Management, 56, 100641. https://doi.org/https://doi.org/10.1016/j.mulfin.2020.100641 Přejít k původnímu zdroji...
    33. Khan, M. A., Khan, M. A., Khan, M. A., Haddad, H., Al-Ramahi, N. M., Sherfudeen, N. (2023). Country-level institutional quality and financial system efficiency: an international evidence. Plos one, 18(8), e0290511. Přejít k původnímu zdroji...
    34. Kutan, A. M., Samargandi, N., Sohag, K. (2017). Does Institutional Quality Matter for Financial Development and Growth? Further Evidence from MENA Countries [ https://doi.org/10.1111/1467-8454.12097]. Australian Economic Papers, 56(3), 228-248. https://doi.org/https://doi.org/10.1111/1467-8454.12097 Přejít k původnímu zdroji...
    35. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., Vishny, R. W. (1999). Investor protection: origins, consequences, and reform. National Bureau of Economic Research Cambridge, Mass., USA. Přejít k původnímu zdroji...
    36. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., Vishny, Robert W. (1998). Law and Finance. Journal of Political Economy, 106(6), 1113-1155. https://doi.org/10.1086/250042 Přejít k původnímu zdroji...
    37. Lei, L., Luo, Y. (2023). Political/Policy Uncertainty, Corporate Disclosure, and Information Asymmetry*. Accounting Perspectives, 22(1), 87-110. https://doi.org/https://doi.org/10.1111/1911-3838.12317 Přejít k původnímu zdroji...
    38. Li, T., Ma, F., Zhang, X., Zhang, Y. (2020). Economic policy uncertainty and the Chinese stock market volatility: Novel evidence. Economic Modelling, 87, 24-33. https://doi.org/https://doi.org/10.1016/j.econmod.2019.07.002 Přejít k původnímu zdroji...
    39. Li, Z., Rizvi, S. K. A., Rubbaniy, G., Umar, M. (2021). Understanding the dynamics of resource curse in G7 countries: The role of natural resource rents and the three facets of financial development. Resources Policy, 73, 102141. https://doi.org/https://doi.org/10.1016/j.resourpol.2021.102141 Přejít k původnímu zdroji...
    40. Liu, L., Zhang, T. (2015). Economic policy uncertainty and stock market volatility. Finance Research Letters, 15, 99-105. https://doi.org/https://doi.org/10.1016/j.frl.2015.08.009 Přejít k původnímu zdroji...
    41. Lu, C., Yang, M., Xia, X. (2023). Economic policy uncertainty and default risk: Evidence from China. Economic Analysis and Policy, 79, 821-836. https://doi.org/https://doi.org/10.1016/j.eap.2023.06.028 Přejít k původnímu zdroji...
    42. Ma, H., Hao, D. (2022). Economic policy uncertainty, financial development, and financial constraints: Evidence from China. International Review of Economics & Finance, 79, 368-386. https://doi.org/https://doi.org/10.1016/j.iref.2022.02.027 Přejít k původnímu zdroji...
    43. Mishkin, F. S. (1999). Global Financial Instability: Framework, Events, Issues. Journal of Economic Perspectives, 13(4), 3-20. https://doi.org/10.1257/jep.13.4.3 Přejít k původnímu zdroji...
    44. Ng, J., Saffar, W., Zhang, J. J. (2020). Policy uncertainty and loan loss provisions in the banking industry. Review of Accounting Studies, 25(2), 726-777. https://doi.org/10.1007/s11142-019-09530-y Přejít k původnímu zdroji...
    45. Ngene, G. M., Tah, K. A. (2023). How are policy uncertainty, real economy, and financial sector connected? Economic Modelling, 123, 106291. https://doi.org/https://doi.org/10.1016/j.econmod.2023.106291 Přejít k původnímu zdroji...
    46. Nguyen, C. P., Le, T.-H., Su, T. D. (2020). Economic policy uncertainty and credit growth: Evidence from a global sample. Research in International Business and Finance, 51, 101118. https://doi.org/https://doi.org/10.1016/j.ribaf.2019.101118 Přejít k původnímu zdroji...
    47. Nguyen, H. M., Thai-Thuong Le, Q., Ho, C. M., Nguyen, T. C., Vo, D. H. (2022). Does financial development matter for economic growth in the emerging markets? Borsa Istanbul Review, 22(4), 688-698. https://doi.org/https://doi.org/10.1016/j.bir.2021.10.004 Přejít k původnímu zdroji...
    48. North, D. C. (1990). A Transaction Cost Theory of Politics. Journal of Theoretical Politics, 2(4), 355-367. https://doi.org/10.1177/0951692890002004001 Přejít k původnímu zdroji...
    49. Ogbonna, O. E., Ogbuabor, J. E., Manasseh, C. O., Ekeocha, D. O. (2022). Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa. Economic Change and Restructuring, 55(4), 2111-2136. https://doi.org/10.1007/s10644-021-09378-w Přejít k původnímu zdroji...
    50. Orlowski, L. T. (2023). How susceptible is the European financial stability to economic policy uncertainty? Journal of Policy Modeling. https://doi.org/https://doi.org/10.1016/j.jpolmod.2023.07.011 Přejít k původnímu zdroji...
    51. Phan, D. H. B., Iyke, B. N., Sharma, S. S., Affandi, Y. (2021). Economic policy uncertainty and financial stability-Is there a relation? Economic Modelling, 94, 1018-1029. https://doi.org/https://doi.org/10.1016/j.econmod.2020.02.042 Přejít k původnímu zdroji...
    52. Rashid Khan, H. U., Islam, T., Yousaf, S. U., Zaman, K., Shoukry, A. M., Sharkawy, M. A., Gani, S., Aamir, A., Hishan, S. S. (2019). The impact of financial development indicators on natural resource markets: Evidence from two-step GMM estimator. Resources Policy, 62, 240-255. https://doi.org/https://doi.org/10.1016/j.resourpol.2019.04.002 Přejít k původnímu zdroji...
    53. Saqib, N., Usman, M., Ozturk, I., Sharif, A. (2024). Harnessing the synergistic impacts of environmental innovations, financial development, green growth, and ecological footprint through the lens of SDGs policies for countries exhibiting high ecological footprints. Energy Policy, 184, 113863. https://doi.org/https://doi.org/10.1016/j.enpol.2023.113863 Přejít k původnímu zdroji...
    54. Schiantarelli, F., Stacchini, M., Strahan, P. E. (2020). Bank Quality, Judicial Efficiency, and Loan Repayment Delays in Italy. The Journal of Finance, 75(4), 2139-2178. https://doi.org/https://doi.org/10.1111/jofi.12896 Přejít k původnímu zdroji...
    55. Shabir, M., Jiang, P., Bakhsh, S., Zhao, Z. (2021). Economic policy uncertainty and bank stability: Threshold effect of institutional quality and competition. Pacific-Basin Finance Journal, 68, 101610. https://doi.org/https://doi.org/10.1016/j.pacfin.2021.101610 Přejít k původnímu zdroji...
    56. Shabir, M., Jiang, P., Shahab, Y., Wang, P. (2023). Geopolitical, economic uncertainty and bank risk: Do CEO power and board strength matter? International Review of Financial Analysis, 87, 102603. https://doi.org/https://doi.org/10.1016/j.irfa.2023.102603 Přejít k původnímu zdroji...
    57. Svirydzenka, K. (2016). Introducing a new broad-based index of financial development. International Monetary Fund. Přejít k původnímu zdroji...
    58. Tsai, I. C. (2017). The source of global stock market risk: A viewpoint of economic policy uncertainty. Economic Modelling, 60, 122-131. https://doi.org/https://doi.org/10.1016/j.econmod.2016.09.002 Přejít k původnímu zdroji...
    59. Valickova, P., Havranek, T., Horvath, R. (2015). FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: A META-ANALYSIS. Journal of Economic Surveys, 29(3), 506-526. https://doi.org/https://doi.org/10.1111/joes.12068 Přejít k původnímu zdroji...
    60. Yung, K., Root, A. (2019). Policy uncertainty and earnings management: International evidence. Journal of Business Research, 100, 255-267. https://doi.org/https://doi.org/10.1016/j.jbusres.2019.03.058 Přejít k původnímu zdroji...

    Tento článek je publikován v režimu tzv. otevřeného přístupu k vědeckým informacím (Open Access), který je distribuován pod licencí Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), která umožňuje nekomerční distribuci, reprodukci a změny, pokud je původní dílo řádně ocitováno. Není povolena distribuce, reprodukce nebo změna, která není v souladu s podmínkami této licence.


    Návrat zpět