The World Uncertainty Index

Banks’ Return Reaction to Freedom, Sentiment, and Uncertainty

The global crisis in 2008 reminded us of the importance of the financial sector for the macroeconomy, a lesson many had forgotten in the decades after the previous global crisis, the Great Depression. Financial risk matters. It is necessary for investment and growth, while also driving uncertainty, inefficiency, recessions, and crises.

How global risk perceptions affect economic growth

The article provides an overview of the scientific discussion on the impact of uncertainty on the liquidity of Ukrainian banks in a war. The study's primary purpose is to analyze the existing literature, systematize various approaches and study the impact of uncertainty on the bank's liquidity. This study examines the arguments and counterarguments associated with this issue through a comprehensive review of scientific sources, considering geopolitical risks, economic fluctuations, and regulatory changes. The relevance of solving this scientific problem lies in understanding the problems that Ukrainian banks face when managing liquidity in a war. The study of the topic follows a logical sequence, starting with the systematization of literary sources and approaches to solving the problem. The research methodology includes an empirical analysis using relevant data and statistical methods to analyze the relationship between uncertainty indicators and the bank's liquidity. The object of the study is Ukrainian banks operating in war conditions, as they face unique challenges in connection with the full-scale military aggression of the Russian Federation. The paper presents an empirical analysis that reveals a robust negative relationship between uncertainty indicators and liquidity ratios set by the National Bank of Ukraine (NBU). This conclusion highlights the negative impact of uncertainty on banks' liquidity, as evidenced by the decrease in liquidity below the established NBU standards. The study empirically confirms and theoretically proves that increased uncertainty negatively affects the liquidity of Ukrainian banks. The results can be helpful to bank authorities, regulators, and policy makers in developing effective liquidity risk management strategies and formulating appropriate policies to mitigate the adverse effects of uncertainty on banks' liquidity. In conclusion, this study contributes to understanding uncertainty's impact on Ukrainian banks’ liquidity under wartime conditions. The empirical analysis provides insight into the challenges faced by banks and offers insights for improving liquidity risk management practices in the banking sector.

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Evaluating The Significance of Uncertainty on Bank Liquidity: A Case Study of Ukrainian Banks in Russian Military Aggression

Abstract Using the measure of uncertainty, i.e., the World Economic Policy Uncertainty Index (WUI) developed by Ahir et al. (2018), this study analyses the effect of uncertainty on carbon dioxide emission reporting and performance. The methodological approach uses the Generalized Method of Moments (GMM), utilising a comprehensive set of 604 firms that are obtained from the Fortune Global 500 list and covering the period 2005–2020. We demonstrate that WUI positively influences carbon dioxide emission reporting and negatively influences carbon dioxide emission reporting in order to mitigate the negative effects of uncertainty and increase firm trust by engaging in more sustainable practices. Additionally, our findings illustrate that carbon dioxide emission reporting is greater in firms operating in emissions-intensive industries in order to strengthen investors’ confidence and trust, especially during periods of high WUI. Finally, the study finds that higher emitters have lower carbon dioxide emission performance due to political and social pressures on these firms to incorporate environmental considerations, especially during periods of high WUI. Particularly for the regulatory body and the industry association when creating improved legislation and recommendations on environmental and social reports relating carbon emission reporting and performance, our empirical findings should have urgent practical ramifications. 

/pdf/how-does-world-economic-policy-uncertainty-influence-the-2kxc2oxp.pdf

The World Uncertainty Index

Citations

Banks’ Return Reaction to Freedom, Sentiment, and Uncertainty

How global risk perceptions affect economic growth

Evaluating The Significance of Uncertainty on Bank Liquidity: A Case Study of Ukrainian Banks in Russian Military Aggression

How does world economic policy uncertainty influence the carbon dioxide emission reporting and performance? Study of Global Fortune 500 firms

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