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Central Bank Communication in the Financial Crisis: Evidence from a Survey of Financial Market Participants

Bernd Hayo and Matthias Neuenkirch ()

No 2014-01, Research Papers in Economics from University of Trier, Department of Economics

Abstract: In this paper, we study whether central bank communication has a positive effect on market participants’ perception of central banks’ (i) credibility, (ii) unorthodox measures, and (iii) independence. We utilise a survey of more than 550 financial market participants from around the world who answered questions in reference to the Bank of England (BoE), the Bank of Japan (BoJ), the European Central Bank (ECB), and the Federal Reserve (Fed). We find that market participants believe that the Fed communicates best, followed by the BoE, ECB, and BoJ. Similar rankings are found on the issues of credibility, satisfaction with unconventional monetary policy, and possible deterioration in independence. Using ordered probit models, we show that central bank communication has a positive effect on how central banks are perceived and understood, as it enhances credibility, increases satisfaction with unorthodox measures, and fosters perceived independence of central banks.

Keywords: Central Bank; Communication; Credibility; Financial Crisis; Financial Market Participants; Independence; Survey; Unconventional Monetary Policy (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2014
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http://www.uni-trier.de/fileadmin/fb4/prof/VWL/EWF/Research_Papers/2014-01.pdf Second version, 2014 (application/pdf)

Related works:
Journal Article: Central bank communication in the financial crisis: Evidence from a survey of financial market participants (2015) Downloads
Working Paper: Central Bank Communication in the Financial Crisis: Evidence from a Survey of Financial Market Participants (2014) Downloads
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