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The impact of Central Bank Independence and Transparency on Inflation in Sub-Saharan Africa

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  • Kyalisiima Prisca

    (Ph.D Candidate, School of International Trade and Economics, University of International Business and Economics (UIBE), Beijing, China. Lecturer in the Department of Banking and Finance, Mountains of the Moon University, Fort Portal, Uganda.)

  • Prof. Yang Jun

    (School of International Trade and Economics, University of International Business and Economics (UIBE), Beijing, China.)

Abstract

This study seeks to examine the impact of central bank independence and transparency on inflation in sub-Saharan Africa (SSA). The role of central banks is to maintain price stability in the economy. Many scholars have independent and transparent writings due to the image of the Central Banks. On the other hand, other scholars have made clear the negative effects of high inflation as the main macroeconomic indicator used in this paper. In practice, some current studies have concluded that central bank independence and transparency lead to macroeconomic performance (low inflation). Empirical use of regression and analysis is performed for 15 sub-Saharan African countries with data for the period 1998–14 using panel fixed effects model. This paper contributes to research by exploring more than central bank independence as used by many scholars, and adds to literature about Central Bank Independence in Sub Saharan Africa. The results of this research study show that central bank independence and transparency (participant term; CBI_Transp) are statistically significant at 95%, so central bank independence and transparency go hand in hand; reducing inflation in sub-Saharan Africa. From the regression output, we conclude that the interactive variable and the single variables have positive coefficients, which is contrary to the main neoclassical theory used in this paper.

Suggested Citation

  • Kyalisiima Prisca & Prof. Yang Jun, 2020. "The impact of Central Bank Independence and Transparency on Inflation in Sub-Saharan Africa," International Journal of Science and Business, IJSAB International, vol. 4(12), pages 38-52.
    • Handle: RePEc:aif:journl:v:4:y:2020:i:12:p:38-52
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    References listed on IDEAS

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