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Central bank communication on financial stability
Vaško, Dan ; Horváth, Roman (advisor) ; Geršl, Adam (referee)
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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