EconPapers    
Economics at your fingertips  
 

Independent central banks and banking crisis liquidity

Michael A. Gavin ()
Additional contact information
Michael A. Gavin: The University of Toronto

The Review of International Organizations, 2020, vol. 15, issue 1, No 4, 109-131

Abstract: Abstract This study develops and tests a formal model that shows why central banks protected from direct government borrowing supply a larger financial safety net for commercial banks during a crisis. This result is derived from a novel model of central bank independence grounded in the rules governing access to the central bank’s balance sheet, rather than in the politics of inflation. Subsequent analysis shows that this result is mediated by the degree of leverage in the banking system, but only in democracies where government borrowing restrictions are credible. Supporting quantitative evidence comes from an event study on a large sample of emerging market banking crises between 1980-2009.

Keywords: Central bank independence; Political economy; Banking crises; Financial safety nets; Game theory; Event study (search for similar items in EconPapers)
JEL-codes: C23 C51 C60 E58 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11558-018-9324-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:revint:v:15:y:2020:i:1:d:10.1007_s11558-018-9324-5

Ordering information: This journal article can be ordered from
http://www.springer. ... iology/journal/11558

DOI: 10.1007/s11558-018-9324-5

Access Statistics for this article

The Review of International Organizations is currently edited by A. Dreher

More articles in The Review of International Organizations from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-04-23
Handle: RePEc:spr:revint:v:15:y:2020:i:1:d:10.1007_s11558-018-9324-5