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The Performance of Melanesian Central Banks

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  • Michael Turner

    ()
    (Lecturer Financial Accounting, School of Accounting, Curtin University, Western Australia)

  • Alistair Brown

    ()
    (Professor, School of Accounting, Curtin University, Western Australia)

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    Abstract

    Since independence, the Melanesian central banks of the Reserve Bank of Fiji, Bank of Papua New Guinea, Central Bank of Solomon Islands and Reserve Bank of Vanuatu have operated autonomously in their respective domestic economies through troublesome times. In one form or another, they have had to endure international condemnation, coups, corruption and crises. Using classic modernization theory and combination reporting analysis, this paper considers possible operational central bank efficiencies from the construction of a joint Melanesian central bank. Annual reports for the year ending 2008 from the cities of Suva, Port Moresby, Honiara and Port Vila were gathered to conduct textual analysis of the annual reporting of the Melanesian central banks, both individually and collectively through combination reporting analysis. The results of the analysis of the performance of the individual Melanesian central banks identify huge net losses resulting from speculative foreign currency trading, substantial risks from holding extensive foreign assets, and worrying governance issues through unusual dividend practices and balance sheet reserve manipulation. In light of the results, there appears a case for using combination reporting as an instrument for examining potential performance of emerging central bank problems and for considering a united Melanesian central bank to help rectify some of these problems. The implications of this study suggest that growth of linkages between Melanesian countries within the Asia Pacific region may abound through regional and economic central bank integration.

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    File URL: http://www.cbcg.me/repec/cbk/journl/vol2no1-5.pdf
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    Bibliographic Info

    Article provided by Central bank of Montenegro in its journal Journal of Central banking Theory and Practice.

    Volume (Year): 2 (2013)
    Issue (Month): 1 ()
    Pages: 89-110

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    Handle: RePEc:cbk:journl:v:2:y:2013:i:1:p:89-110

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    Related research

    Keywords: Central Bank; Combination Reporting Analysis; Melanesian Independent Countries; Classic Modernization Theory;

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    References

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    1. Cukierman, Alex & Miller, Geoffrey & Neyapti, Bilin, 2001. "Central Bank Reform, Liberalization and Inflation in Transition Economies - An International Perspective," CEPR Discussion Papers 2808, C.E.P.R. Discussion Papers.
    2. Feeny, Simon, 2007. "Foreign Aid and Fiscal Governance in Melanesia," World Development, Elsevier, vol. 35(3), pages 439-453, March.
    3. Frederic S. Mishkin, 1999. "Financial Consolidation: Dangers and Opportunities," NBER Working Papers 6655, National Bureau of Economic Research, Inc.
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    5. Vasco Curdia & Michael Woodford, 2010. "The Central Bank Balance Sheet as an Instrument of Monetary Policy," Discussion Papers 0910-16, Columbia University, Department of Economics.
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    7. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    8. Hughes, Joseph P. & Lang, William W. & Mester, Loretta J. & Moon, Choon-Geol, 1999. "The dollars and sense of bank consolidation," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 291-324, February.
    9. Mas, Ignacio, 1995. "Central bank independence: A critical view from a developing country perspective," World Development, Elsevier, vol. 23(10), pages 1639-1652, October.
    10. Jayaraman, Tiru K. & Ward , Bert D., 2006. "A Single Currency for Pacific Island Countries: An SVAR Analysis," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 59(1), pages 83-111.
    11. Bertram, Geoffrey, 2004. "On the Convergence of Small Island Economies with Their Metropolitan Patrons," World Development, Elsevier, vol. 32(2), pages 343-364, February.
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