Central bank transparency and cross-border banking

Stefan Eichler, Helge C.N. Littke and Lena Tonzer

Journal of International Money and Finance, 2017, vol. 74, issue C, 1-30

Abstract: 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.

Keywords: Central bank transparency; Cross-border banking; Gravity model; PPML (search for similar items in EconPapers)
JEL-codes: E58 F30 G15 G21 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:74:y:2017:i:c:p:1-30

DOI: 10.1016/j.jimonfin.2017.02.030

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