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Central bank transparency and financial stability

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  • Horváth, Roman
  • Vaško, Dan

Abstract

We develop a comprehensive index of the transparency of central banks regarding their policy framework to safeguard financial stability for 110 countries from 2000 to 2011 and examine the determinants and effects of this transparency. We find that the degree of transparency increased in the 2000s, though it still varied greatly across the countries in our study. Our regression results suggest that the central banks that have a transparent monetary policy are more likely to show increased transparency in their framework for financial stability. More developed countries exhibit greater transparency, past episodes of high financial instability have a negative effect on transparency and the legal origin matters, too. In line with theoretical literature, our results also suggest a non-linear effect of central bank financial stability transparency on financial stability. If transparency is too high, it is not beneficial for financial stability.

Suggested Citation

  • Horváth, Roman & Vaško, Dan, 2016. "Central bank transparency and financial stability," Journal of Financial Stability, Elsevier, vol. 22(C), pages 45-56.
  • Handle: RePEc:eee:finsta:v:22:y:2016:i:c:p:45-56
    DOI: 10.1016/j.jfs.2015.12.003
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:finsta:v:36:y:2018:i:c:p:336-345 is not listed on IDEAS
    2. repec:eee:jebusi:v:96:y:2018:i:c:p:15-41 is not listed on IDEAS

    More about this item

    Keywords

    Financial stability; Transparency; Central banks;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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