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Why Do Central Banks Go Weak?

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Author Info
Nada Oulidi
Alain Ize
Abstract

Determinants of central banks' profitability are studied using a statistical analysis of their balance sheets, country characteristics, and the macroeconomic and institutional environments in which they operate. Central banks at both tails of the distribution of profits generally operate in poorer countries with more troubled macroeconomic and institutional environments. For these central banks, profitability is strongly influenced by fiscal dominance and, to a lesser extent, by how actively central banks used their balance sheet for monetary policy purposes.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/13.

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Length: 17 pages
Date of creation: 23 Jan 2009
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Handle: RePEc:imf:imfwpa:09/13

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Related research
Keywords: Central banks ; Profits ; Fiscal analysis ; Cross country analysis ; Fiscal management ; Economic models ; Bank soundness ;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ulrich H. Klueh & Peter Stella, 2008. "Central Bank Financial Strength and Policy Performance: An Econometric Evaluation," IMF Working Papers 08/176, International Monetary Fund. [Downloadable!]
  2. Alain Ize, 2005. "Capitalizing Central Banks: A Net Worth Approach," IMF Working Papers 05/15, International Monetary Fund. [Downloadable!]
  3. John W. Dalton & Claudia Helene Dziobek, 2005. "Central Bank Losses and Experiences in Selected Countries," IMF Working Papers 05/72, International Monetary Fund. [Downloadable!]
  4. Luc Laeven & Fabian Valencia, 2008. "Systemic Banking Crises: A New Database," IMF Working Papers 08/224, International Monetary Fund. [Downloadable!]
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This page was last updated on 2009-11-20.


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