National Culture and Central Bank Transparency
43 Pages Posted: 20 Feb 2020 Last revised: 30 Mar 2020
Date Written: March 27, 2020
Abstract
Central banking has been traditionally characterized by mystique and an organizational culture of secrecy. While in recent years there has been a shift towards greater transparency around the globe, the degree of transparency continues to vary across countries. This is surprising because the transparency of central banks has been associated with positive economic outcomes, and it might also be related to integrity and ethical issues like social responsibility, the value of virtue of truthfulness for public trust, and the accountability of independent central banks to the public. The present study examines whether and how the differences in central bank transparency can be explained by a national culture of secretiveness. Using a large cross-country sample of central banks from around the globe we document a negative association between central bank transparency and a societal culture of secrecy. This finding is robust to the controls for various country-specific attributes, and the use of instrumental regressions to lessen concerns about endogeneity.
Keywords: Central Banking, Culture, Transparency
JEL Classification: E58, Z18, A13
Suggested Citation: Suggested Citation