Does economic policy uncertainty affect banking systemic risk?

This paper constructs a panel model to conduct an empirical analysis on the influence of economic policy uncertainty on the banking systemic risk and its mechanism based on the annual data of 16 listed banks in China from 2010 to 2020. The research shows that:1) Economic policy uncertainty has a positive effect on banking systemic risk. Compared with state-owned banking sector, economic policy uncertainty has more positive influence on non-state-owned banking sector. 2) Risk-taking, net interest margin and inter-bank business play a mediating role in the relationship between economic policy uncertainty and systemic risk of banks. Economic policy uncertainty can promote systemic risk of banks mainly by increasing bank risk-taking, narrowing net interest margin and expanding the scale of inter-bank business. The transmission channel of "economic policy uncertainty-risk-taking,net interest margin,inter-bank business-banking systemic risk" are effective. 3) Both bankers' optimism and capital regulation have a negative moderating effect on the relationship between economic policy uncertainty and banking systemic risk, and the improvement of bankers' optimism and capital regulation will weaken the promoting effect of economic policy uncertainty on banking systemic risk. © 2022 Systems Engineering Society of China. All rights reserved.