In terms of banking regulation, the extant literature underlines the capacity of banks to adjust credit to legislative changes. Bordo et al. [2016] found that policy uncertainty around recessions can be mitigated by limiting ad hoc policy changes and adopting state-contingent policies. Hu and Gong [2019] also confirmed the mitigation role of law enactment using a sample of 19 major economies covering the period from 2005 to 2011; their empirical analysis presents evidence that microprudential and macroprudential regulations can mitigate the harmful effects of economic policy uncertainty on net loans’ growth rates. However, a consistent legislative agenda may require a certain degree of institutional quality. In this sense, loan costs are higher when banks (Francis et al. [2014]) and firms (Bradley et al. [2016]) are subject to severe political uncertainties. Consequently, banking systems seem to adjust lending policies depending on the changes in the institutional regulatory environment. Moreover, uncertainty may emerge when laws are vague or incomplete. Gissler et al. [2016] pointed out that regulatory uncertainty can contract credit. By examining minimum requirement laws governing mortgage lenders’ decisions to extend credit, they noticed a lack of regulation specifying the borrower’s debt-to-income ratio values; for 18 months, banks in United States of America (U.S.) were uncertain about those values. As a result, the higher regulatory uncertainty severely reduced lending during 2011 and 2013. Mortgage lending expanded once the Consumer Financial Protection Bureau published the final requirements…