Work detail

Central bank communication on financial stability

Author: Mgr. Dan Vaško
Year: 2012 - summer
Leaders: prof. Roman Horváth Ph.D.
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 80
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.
Abstract: This research analyses central bank communication on financial stability. First, most
important international comparable features of the communication are identified, such as Financial
Stability Reports, Stress tests, Financial soundness indicators, etc.
These are then used for the construction of Financial stability transparency index (FST index)
for 110 countries from 2000 to 2011. FST index is used to determine the most important drivers of
central bank communication. In particular, the level of transparency towards financial stability
depends most on monetary policy transparency, size and development of the economy.
Finally, the impact of financial stability transparency on financial stability is under
investigation. Using two proxies for financial stress, for the first time, evidence of the influence of
central bank communication on financial soundness was found. It is concluded that the
communication still has not reached its steady state and markets have only limited experience using
it. However, the communication has a strong potential to influence financial stability in the future.
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