Monetary policy uncertainty and bank leverage: Evidence from China

We investigate the impact of monetary policy uncertainty on bank leverage in China. First, we imply a novel method to measure China's monetary policy uncertainty. Second, we estimate the relationship between bank leverage ratio and monetary policy uncertainty. Our main finding is that increases in monetary policy uncertainty have a significantly negative impact on bank leverage ratio in China, especially after 2008Q4. Checked with an alternative measurement of China's monetary policy uncertainty, our finding remains robust. (C) 2021 Elsevier B.V. All rights reserved.