Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240364 
Year of Publication: 
2020
Series/Report no.: 
BOFIT Discussion Papers No. 13/2020
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
We investigate the relationship of central bank independence and banks' systemic risk measures. Our results support the case for central bank independence, revealing that central bank independence has a robust, negative, and significant impact on the contribution and exposure of a bank to systemic risk. Moreover, the impact of central bank independence is similar for the stand-alone risk of individual banks. Secondarily, we study how the central bank independence affects the impact of selected country and banking system indicators on these systemic measures. The results show that central bank independence may exacerbate the effect of a crisis on the contribution of banks to systemic risk. However, central bank independence seems to mitigate the harmful effect of a bank's high market power on its systemic risk contribution.
Subjects: 
systemic risk
central bank independence
supervisory framework
JEL: 
G21
E58
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-333-1
Document Type: 
Working Paper

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