We analyze the effect of central bank transparency on cross-border bank activities. Based on a panel gravity model for cross-border bank claims for 21 home and 47 destination countries from 1998 to 2010, we find strong empirical evidence that a rise in central bank transparency in the destination country, on average, increases cross-border claims. Using interaction models, we find that the positive effect of central bank transparency on cross-border claims is only significant if the central bank is politically independent. Central bank transparency and credibility are thus considered complements by banks investing abroad.
We analyze the effect of central bank transparency on cross-border bank activities. Based on a panel gravity model for cross-border bank claims for 21 home and 47 destination countries from 1998 to 2010, we find strong empirical evidence that central bank transparency in the destination country on average increases cross-border claims. Using interaction models, we find that the positive effect of central bank transparency on cross-border claims is only significant if the central bank is politically independent. Central bank transparency and credibility are thus considered as complements by banks investing abroad.
Many countries have implemented reforms on their Central Banks granting them more independence from political influences. This can be attributed to the recent research in this area which showed that making the Central Banks more independent is a very good means of achieving lower inflation/price stability in a country. Empirical work supporting this theory shows that there is a significant relationship between inflation and Central Bank Independence but not necessary enough to really bring down inflationary problems. Using data for 6 countries over the period of 1997-2011, result supports this theory but it also shows that other control variable needs to be added for better explanation, and also CBI should be part of policies and strategies to help fight and control inflation in these countries and not necessary the only solution as other policies need to be adopted by their Government and Central Banks. Keywords: Central Bank Independence, Inflation, Budget Surplus ; ÖZ : Birçok ülkede, Merkez Bankalarını politik baskılardan daha bağımsız hale getirme yolunda reformlar yapılmıştır. Bu reformların sebebi, bu alanda yapılan çalışmaların merkez bankalarının bağımsız hale getirilmelerinin enflasyon/ fıyat istikrarında olumlu katkısının olduğunu göstermesidir. Bu alandaki empirik çalışmalar enflasyon ile Merkez Bankası bağımsızlığı arasında istatiksel olarak önemli bir ilişki olduğunu göstermektedir. Yine de bu ilişki enflasyon sorununu tamamen çözecek büyüklükte olmayabillir. Bu çalışmada da 6 ülkededen 1997 ile 2011 yılları arasındaki veriler kullanılmış, ve panel veri çalışması sonucunda enflasyon ile Merkez Bankası bağımsızlığı arasında ters bir ilişki olduğu gözlemlenmiştir. Anahtar Kelimeler: Merkez Bankası Bağımsızlığı, Enflasyon, Bütçe Açığı/ Fazlalığı, Para Arzı ; Master of Science in Economics. Thesis (M.S.)--Eastern Mediterranean University, Faculty of Business and Economics, Dept. of Economics, 2015. Supervisor: Assist. Prof. Dr. Çağay Coşkuner.
Several studies have examined the affect of quality of the government institution and the level of corruption on the cost of crisis. Rather than watch the goverment, we concern on the role of central bank quality institution to predict the cost of crisis. We then include the central bank transparency, government owned on banking sector, corruption and some macroeconomic indicator to predict the cost of crisis that consist of banking loss and economic loss. Using sample of 13 crisis countries during 1997 ?? 2006, we find that some governance indicators like political stability, rule of law and control of corrruption have a strong relationship with the central bank transparency. Then, we find that central bank transparency, government ownership on banking sector, corruption, and monetary indicator affect the deterioration on the bank lending during the crisis. If the fiscal indicator and geographic location added to the model, it can predict the deceleration economic growth during the crisis period. Key words: central bank transparency, government owned bank, corruption, cost of crisis
In a context of institutional flexibility and political necessity, central banks' responses to the recent crises modelled the scope of their mandate, in law and in action. The current mandates of the European Central Bank, the Federal Reserve System, the Bank of Canada, and of the Bank of England are examined in their constitutional, statutory, and/or legal sources. This inquiry is complemented with recent policy statements and institutional discourse to interpret the mandate of those central banks in action and their underpinning objectives, tasks, and measures, during and in the aftermath of the crises. The central banks' mandate is furthermore contextualised within the examined central banks' organisational structure and the constitutional settings of the EU and of the states in which the central banks are embedded. ; The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
In a context of institutional flexibility and political necessity, central banks' responses to the recent crises modelled the scope of their mandate, in law and in action. The current mandates of the European Central Bank, the Federal Reserve System, the Bank of Canada, and of the Bank of England are examined in their constitutional, statutory, and/or legal sources. This inquiry is complemented with recent policy statements and institutional discourse to interpret the mandate of those central banks in action and their underpinning objectives, tasks, and measures, during and in the aftermath of the crises. The central banks' mandate is furthermore contextualised within the examined central banks' organisational structure and the constitutional settings of the EU and of the states in which the central banks are embedded.
Nowadays the role of central bank is unquestioned and nearly ubiquitous. But was this always the case? This thesis analyses how De Nederlandsche Bank (DNB) developed into a central bank during the first four decades of its existence. Its establishment in 1814 was the result of a combination of both the need to address problems in the payment system, i.e. 'scarcity of money' (with its deflationary effects) and government's desire to create access to cheap finance. DNB's Charter was largely based on a proposal drafted in 1798 which aimed to establish a bank that could act as 'lender of last resort'. Resistance to this 'public bank' could only be overcome by Willem I with his autocratic powers in 1814. The King adjusted the original proposal to serve his personal intention to use DNB to support government finance ('the fiscal theory'). This motive was important in the establishment of DNB, but in practice not much came of it since DNB was a private company, which effectively safeguarded it from government interference. DNB did not lend to the Government until 1834 and even then it remained limited. The Government respected DNB's independence, as it was well aware of the impact of overt interference on DNB's reputation and effectiveness. Initially, the circulation of DNB banknotes grew only slowly. Acceptance depended on voluntary uptake in the market and it took a long time to build up confidence. Certainly up until about 1840, the market looked upon DNB with suspicion because of its close relationship to government. Besides, there was an alternative means of payment available provided by the cashiers with their current account facilities and mutual clearing process. With the renewal of the Bank's Charter in 1839 DNB entered into competition with the cashiers and drove them out of business. This was not just the result of 'natural' market forces at work, but clearly initiated by the change in the Charter as proposed by the Government. DNB's scale was decisive. From 1840 onwards, DNB was effectively, although not de ...
During the past decades, central banks acquired considerable independence from democratic institutions under the Central Bank Independence (CBI) template. Yet, the changing role of central banks since the 2007–2008 crisis has led to a (re)politicization of central banking and has weakened the scientific and political consensus on the CBI model. In turn, central bankers have tried to neutralize repoliticization and these efforts have shaped their unconventional monetary policies. In this chapter, we review how the (critical) political economy literature has scrutinized the evolving role of central banks this last decade, and we debunk central banks' depoliticization strategies. First, we examine how financial power shapes central banks' unconventional policies to the benefit of private finance. Second, we analyze how these "high-finance" struggles affects "low-finance," that is, what are the distributive effects of post-crisis monetary policy on firms and households? Finally, we review current debates on alternative monetary tools, which could potentially fare better than current monetary arrangements in distributive, ecological, and democratic terms.
During the past decades, central banks acquired considerable independence from democratic institutions under the Central Bank Independence (CBI) template. Yet, the changing role of central banks since the 2007–2008 crisis has led to a (re)politicization of central banking and has weakened the scientific and political consensus on the CBI model. In turn, central bankers have tried to neutralize repoliticization and these efforts have shaped their unconventional monetary policies. In this chapter, we review how the (critical) political economy literature has scrutinized the evolving role of central banks this last decade, and we debunk central banks' depoliticization strategies. First, we examine how financial power shapes central banks' unconventional policies to the benefit of private finance. Second, we analyze how these "high-finance" struggles affects "low-finance," that is, what are the distributive effects of post-crisis monetary policy on firms and households? Finally, we review current debates on alternative monetary tools, which could potentially fare better than current monetary arrangements in distributive, ecological, and democratic terms.
During the crisis the European Central Bank's roles have been greatly extended beyond its price stability mandate. In addition to the primary objective of price stability and the secondary objective of supporting EU economic policies, we identify ten new tasks related to monetary policy and financial stability. We argue that there are three main constraints on monetary policy: fiscal dominance, financial repercussions and regional divergences. By assessing the ECB's tasks in light of these constraints, we highlight a number of synergies between these tasks and the ECB's primary mandate of price stability. But we highlight major conflicts of interest related to the ECB's participation in financial assistance programmes. We also underline that the ECB's government bond purchasing programmes have introduced the concept of 'monetary policy under conditionality', which involves major dilemmas. A solution would be a major change towards a US-style system, in which state public debts are small, there are no federal bail-outs for states, the central bank does not purchase state debt and banks do not hold state debt. Such a change is unrealistic in the foreseeable future.
In a context of institutional flexibility and political necessity, central banks' responses to the recent crises modelled the scope of their mandate, in law and in action. The current mandates of the European Central Bank, the Federal Reserve System, the Bank of Canada, and of the Bank of England are examined in their constitutional, statutory, and/or legal sources. This inquiry is complemented with recent policy statements and institutional discourse to interpret the mandate of those central banks in action and their underpinning objectives, tasks, and measures, during and in the aftermath of the crises. The central banks' mandate is furthermore contextualised within the examined central banks' organisational structure and the constitutional settings of the EU and of the states in which the central banks are embedded. ; This project is related to the research agenda of the ADEMU project, "A Dynamic Economic and Monetary Union". ADEMU is funded by the European Union's Horizon 2020 Program under grant agreement N° 649396 (ADEMU).
We analyze the conditions of emergence of a twin banking and sovereign debt crisis within a monetary union in which: (i) the central bank is not allowed to provide direct financial support to stressed member states or to play the role of lender of last resort in sovereign bond markets, and (ii) the responsibility of fighting against large scale bank runs, ascribed to domestic governments, is ensured through the implementation of a financial safety net (banking regulation and government deposit guarantee). We show that this broad institutional architecture, typical of the Eurozone at the onset of the financial crisis, is not always able to prevent the occurrence of a twin banking and sovereign debt crisis triggered by pessimistic investors' expectations. Without significant backstop by the central bank, the financial safety net may actually aggravate, instead of improve, the financial situation of banks and of the government.
We analyze the conditions of emergence of a twin banking and sovereign debt crisis within a monetary union in which: (i) the central bank is not allowed to provide direct financial support to stressed member states or to play the role of lender of last resort in sovereign bond markets, and (ii) the responsibility of fighting against large scale bank runs, ascribed to domestic governments, is ensured through the implementation of a financial safety net (banking regulation and government deposit guarantee). We show that this broad institutional architecture, typical of the Eurozone at the onset of the financial crisis, is not always able to prevent the occurrence of a twin banking and sovereign debt crisis triggered by pessimistic investors' expectations. Without significant backstop by the central bank, the financial safety net may actually aggravate, instead of improve, the financial situation of banks and of the government.
We analyze the conditions of emergence of a twin banking and sovereign debt crisis within a monetary union in which: (i) the central bank is not allowed to provide direct financial support to stressed member states or to play the role of lender of last resort in sovereign bond markets, and (ii) the responsibility of fighting against large scale bank runs, ascribed to domestic governments, is ensured through the implementation of a financial safety net (banking regulation and government deposit guarantee). We show that this broad institutional architecture, typical of the Eurozone at the onset of the financial crisis, is not always able to prevent the occurrence of a twin banking and sovereign debt crisis triggered by pessimistic investors' expectations. Without significant backstop by the central bank, the financial safety net may actually aggravate, instead of improve, the financial situation of banks and of the government.
International audience ; Female Central Bank chairs represent but a tiny minority. To understand why, this article analyzes socioeconomic and socio-political characteristics of the countries where females have chaired Central Banks. Then, it suggests that gender differences in preferences as regards monetary policy goals may have some influence. This hypothesis is based on an empirical analysis showing that female Central Bank chairs focus more than their male colleagues on achieving the price stability goal. This means, then, that females are more resistant than males to political pressures. Finally, it concludes that gender differences in degree of conservatism, may be an explanatory factor in female underrepresentation in the Central Bank chairs.
