Economic policy uncertainty, banks’ lending decisions

Economic uncertainty is an unpredictable changes in economic variables that can have a large impact on other variables and economic entities such as banks and credit institutions, especially in developing countries such as Iran. The purpose of this study was to investigate the effect of economic uncertainty on credit risk, performance and lending decisions of banks. For this purpose, firstly, the effective variables on bank lending decisions were separated into three indicators (credit risk, performance, and lending rates). Also, economic uncertainty was measured using the standard deviation of six variables (exchange rate, annual interest rate, GDP, national income growth rate, ratio of oil sales to national income, tax rate to national income), then research data in the period of five For the year 1390-1394, for 13 banks accepted in the Tehran Stock Exchange, they were assembled by performing different tests, distinguishing between specific bank and macroeconomic variables, from the variability of the research variables. Finally, estimating the econometric model with panel data technology showed that in the first model, the economic uncertainty variable had a positive and significant effect on the credit risk of banks. Also, in the second model, economic uncertainty has a positive effect on the performance of banks, and finally, in the third model, there was no significant relationship between economic uncertainty and the level of bank lending.