استقلال بانک مرکزی و بی ثباتی مالی

It has been argued that central bank independence (CBI) may not only be beneficial for reaching the objective of price stability, but also for maintaining financial stability. Greater independence from external pressure implies that central banks are less politically constrained in acting to prevent financial distress, while it also will allow them to act earlier and more decisively when a crisis erupts. We estimate the relation between CBI and a newly constructed measure of financial instability using a dynamic panel model for the period 1985–2005 with a large set of control variables. We find a significant and robust negative relation between CBI and financial instability, which is mostly due to political independence.

Many central banks have obtained a responsibility for financial stability in addition to their price-stability mandate (Das et al., 2004). Financial stability refers to the smooth functioning of the various components of the financial system, i.e., financial institutions, markets, and payments, settlement, and clearing systems (Čihák, 2007 and Oosterloo and De Haan, 2004). There is a voluminous literature suggesting that central bank independence (CBI) may contribute to price stability (Klomp and De Haan, 2007, Meade and Crowe, 2007 and Cukierman, 2008). It has also been argued that independence may foster financial stability. For example, according to Quintyn and Taylor (2003, p. 259), “regulatory and supervisory independence (RSI) – both from the government and the industry – is essential for the achievement and preservation of financial (sector) stability.” Indeed, there is some evidence suggesting that CBI is positively related to financial stability (cf. Garcia Herrero and Del Rio, 2003 and Čihák, 2007). In this paper we re-examine the effect of CBI on financial instability using dynamic panel models. An innovation of the paper is that we introduce an alternative measure of financial instability that is based on a factor analysis of various indicators of financial instability. In our analysis we include indicators of banking crises, but also various other variables reflecting instability in other parts of the financial system. Our CBI data come from Arnone et al. (2007), who have constructed a CBI indicator for many countries for the end of the 1980s and 2003. The indicator is based on the methodology proposed by Grilli et al. (1991) that distinguishes between political autonomy (i.e., the ability of the central bank to select the objectives of monetary policy) and economic autonomy (i.e., the ability of the central bank to select its instruments). Using the information on central bank law reform as provided by Acemoglu et al. (2008) we decide on the value of the CBI index for all years in between those for which Arnone et al. (2007) provide data. Our sample consists of some 60 countries covering the period 1985–2005. We conclude that there exists a significant negative relation between CBI and financial instability. If we differentiate between political and economic independence, the results indicate that this negative relation is caused by political rather than by economic independence. The remainder of the paper is structured as follows. The next section discusses why CBI may have an impact on financial instability. Section 3 gives a description of the methodology and data used. Section 4 shows our results on the relation between CBI and financial instability. The final section concludes.

It has been argued that central bank independence may foster financial stability. In this paper we re-examine the effect of CBI on financial instability over the period 1985–2005 using dynamic models. We introduce an alternative measure of financial instability that is based on a factor analysis of various indicators of financial instability. This measure not only includes banking crises, but also instability in other parts of the financial system. We conclude that there exists a significant negative relation between CBI and financial instability. If we differentiate between political and economic independence, the results indicate that this negative relation is primarily caused by political rather than by economic independence. Our finding appears robust under various sensitivity tests. We also find that countries in which the central bank has an explicit mandate for financial supervision have lower levels of financial instability. Other economic variables affecting financial instability are: high GDP growth that significantly decreases financial instability, and changes in the exchange rate and financial market liberalization that increase financial instability. Also political instability and lack of law and order increase financial instability.