Policy uncertainty (PU) is an increasingly important issue in many economies. Extensive evidence indicates that higher PU is associated with future negative macroeconomic and microeconomic conditions. In this paper, we examine how PU affects banks' accruals for loan losses. Consistent with banks...

We investigate whether and how firm-level political uncertainty affects firms' bank loan contracting. We find that firms facing higher firm-level political uncertainty are charged higher bank loan costs. This impact is amplified for firms with higher degrees of information asymmetry and firms...