Additional evidence on the information-based contagion effects of bank failures

Article Abstract:

Two competing hypotheses have emerged from the theoretical models introduced in recent years to examine the nature of bank runs and their causes. The first is the pure-panic contagion, while the second is the information-based contagion. A study is conducted which provides support for the second hypothesis. The study focuses on three bank characteristics used to assess the risk of bank runs: the size of the solvent bank, the capital ratio as its proxy for solvency, and the proximity of the headquarters of the solvent banks to those of insolvent banks. The results are discussed.

Research, Economics, Information theory, Bank runs, Bank failures, Information theory in economics

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Interest rate differentials and exchange rate policies in Austria, the Netherlands, and Belgium

Article Abstract:

Interest rate differentials between Germany and Austria, the Netherlands and Belgium are analyzed. These interest differentials include expected exchange rate movements within the band, expected currency realignments and risk premium. Results show a lack of credibility in Belgian exchange rate policy. A large discrepancy is also observed between the adjusted and unadjusted interest differentials of Austria and the Netherlands.

Analysis, Austria, Netherlands, Prices and rates, Economic policy, Belgium, Foreign exchange, Foreign exchange rates, Interest rates, Monetary policy

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Does central bank independence really matter? New evidence for developing countries using a new indicator

Article Abstract:

The turnover rate of central bank governors for 82 developing countries in the period 1980 to 1989 is used as the basis for a new indicator of central bank independence. It is concluded that there is a significant link between central bank independence and inflation (variability).

Laws, regulations and rules, Central banks

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