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This research investigates the relationship between monetary policy and bank liquidity creation, emphasizing the role of economic policy uncertainty.

Impact of monetary policy on bank liquidity creation: Economic policy uncertainty channel

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Randomized trial examines how monetary policy affects bank liquidity in the U.S., highlighting economic policy uncertainty implications.

This research investigates the relationship between monetary policy and bank liquidity creation, emphasizing the role of economic policy uncertainty.
Utilized dynamic panel Generalized Method of Moments (GMM) estimator.
Analyzed quarterly bank-level data from 2001 to 2022.
Examined alternative measures of bank liquidity creation, including category- and maturity-based indices.
Monetary policy has a significant negative effect on bank liquidity creation.
Economic policy uncertainty serves as a crucial transmission channel influencing the banking sector output.
The adverse effect is more pronounced during periods of negative output gaps.

Lee et al. (2026) studied this question.

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