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Central bank transparency and cross-border banking

Listed author(s):
  • Eichler, Stefan
  • Littke, Helge C.N.
  • Tonzer, Lena

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 and operates in a stable economic environment. Central bank transparency and credibility are thus considered complements by banks investing abroad.

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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 74 (2017)
Issue (Month): C ()
Pages: 1-30

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Handle: RePEc:eee:jimfin:v:74:y:2017:i:c:p:1-30
DOI: 10.1016/j.jimonfin.2017.02.030
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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