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The impact of central bank transparency on systemic risk—Evidence from Central and Eastern Europe

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  • Andrieş, Alin Marius
  • Nistor, Simona
  • Sprincean, Nicu

Abstract

The aim of this paper is to analyze the impact of central bank transparency on systemic risk in emerging banking markets using a sample composed of 34 banks from Central and Eastern Europe for a period spanning from 2005 through 2012. Results indicate a positive and significant relationship between central bank transparency and financial institutions’ contribution to systemic risk. On the other side, increased central bank transparency significantly reduces the idiosyncratic risk of banks. The relationship is influenced by the restrictiveness of regulatory framework. We argue that a more transparent central bank is beneficial for the banking sector from a microprudential perspective. However, it may create incentives for financial institutions to engage in risky activities and through herd behavior may increase individual contribution to the risk of the banking system.

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  • Andrieş, Alin Marius & Nistor, Simona & Sprincean, Nicu, 2020. "The impact of central bank transparency on systemic risk—Evidence from Central and Eastern Europe," Research in International Business and Finance, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:riibaf:v:51:y:2020:i:c:s0275531917308735
    DOI: 10.1016/j.ribaf.2018.06.002
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    6. Pires Tiberto, Bruno & Oliveira de Moraes, Claudio & Pio Corrêa, Paloma, 2020. "Does transparency of central banks communication affect credit market? Empirical evidence for advanced and emerging markets," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    7. Makrychoriti, Panagiota & Pasiouras, Fotios, 2021. "National culture and central bank transparency: Cross-country evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).

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    More about this item

    Keywords

    Systemic risk; Central bank transparency; Supervisory framework;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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