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How does central bank transparency affect systemic risk? Evidence from developed and developing countries

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  • Zhang, Xiaoming
  • Liang, Qian
  • Lee, Chien-Chiang

Abstract

This research explores the effects of central bank transparency on systemic risk by taking 1780 commercial banks in 50 countries during 2006–2015 as samples and also discusses whether central bank independence can also influence those effects on systemic risk. The results of the least square method (OLS) and the dynamic panel System Generalized Method of Moments (S-GMM) show that central bank transparency has a non-linear effect on systemic risk in both developed and developing countries. The difference is that central bank transparency has a positive U-shape impact on systemic risk in developed countries and an inverted U-shape impact on systemic risk in developing countries. For both types of countries, improving central bank independence can reduce the effect of central bank transparency on systemic risk.

Suggested Citation

  • Zhang, Xiaoming & Liang, Qian & Lee, Chien-Chiang, 2023. "How does central bank transparency affect systemic risk? Evidence from developed and developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 101-115.
    • Handle: RePEc:eee:quaeco:v:88:y:2023:i:c:p:101-115
    DOI: 10.1016/j.qref.2022.12.005
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    Cited by:

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    2. Deng, Yuanyue & Li, Sijing, 2024. "Do global and local economic policy uncertainties matter for systemic risk in the international banking system," Finance Research Letters, Elsevier, vol. 59(C).

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