What is Financial Uncertainty? How it can be measured? Is there any paper which relate Financial Uncertainty with the performance of Commercial Banks?
You can measure financial uncertainty by combining the volatility of the markets and other issues. It depends which side you are at the market.
In case of performance of Commercial Banks, the major problem may be foreign currency risk and the country's inflation rate.
Uncertainty should be considered as a phenomeneon linked with (observed) dispersion in economic (first of all) and financial growth rates. Growth rates, especially with regard to asset values, can be expressed as negative numbers. That is, why they are interesting from the financial point of view. That is, why those negative values influence balance sheets and income statements of commercial banks and other financial intermediaries.
There are, however, certain cost of financial uncertainty, i.e. for optimal firm decisions considering production and financial risks. Alexander et al. (1986) have discussed this problem in their (very illustrative) paper. For a newer analysis see the study prepared by Arellano et al. (2012).
http://ageconsearch.umn.edu/bitstream/29781/1/18020039.pdf
https://www.minneapolisfed.org/research/sr/sr466.pdf
Thank you all for their valuable comments and suggestions....
Is there any paper which may have linked Efficiency or Performance of Banks with Financial Uncertainty?
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