Monetary Policy Uncertainty, Trade Policy Uncertainty, and Bank Loans

Emerging Markets Finance and Trade

Abstract

During and after the pandemic, several abnormal government and monetary policies may have influenced bank loans. However, there is limited evidence on how US firms have experienced bank loans post-pandemic. This study aims to fill this gap. We find that, on average, US firms pay a higher loan spread and face shorter maturities. The results are mainly driven by economic policy, monetary policy, and trade policy uncertainty. In contrast, banks require less collateral and fewer general covenants. The findings remain robust across various specifications and control variables. This study thus sheds light on how private bank loans have changed in the US after the pandemic.

Source: Emerging Markets Finance and Trade