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Does State‐Level Economic Policy Uncertainty Affect Financial Distress Risk of Financial Institutions?

Priti Biswas et al.

European Financial Management2026https://doi.org/10.1111/eufm.70054article
AJG 3ABDC A
Weight
0.50

Abstract

Using a sample of US banks, we examine the effects of state‐level economic policy uncertainties (EPUs) on banks' distress risk. Our results suggest that state‐level EPUs positively affect the distress risk. The findings are consistent with the alternative measures of distress risk. We document that the discretionary use of loan loss provisions (opacity), as not explicitly disclosed in the formal managerial communication for shareholders, exacerbates the effects of state EPUs on distress risk and does not help the bank's stability. Further, the effects of state‐EPUs increase as the size becomes larger, and diversified and regional banks are the most susceptible.

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https://doi.org/https://doi.org/10.1111/eufm.70054

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@article{priti2026,
  title        = {{Does State‐Level Economic Policy Uncertainty Affect Financial Distress Risk of Financial Institutions?}},
  author       = {Priti Biswas et al.},
  journal      = {European Financial Management},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/eufm.70054},
}

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Does State‐Level Economic Policy Uncertainty Affect Financial Distress Risk of Financial Institutions?

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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