Ahmad_Su2020_Article_HowEffectiveIsCentralBankCommu.pdf (1.3 MB)
How effective is central bank communication in emerging economies? An empirical analysis of the Chinese money markets responses to the People’s Bank of China’s policy communications
journal contributionposted on 2019-05-20, 10:51 authored by Shiwei Su, Ahmad Hassan AhmadAhmad Hassan Ahmad, Justine WoodJustine Wood
Central banks, in both developed and developing economies, are responding to the increased demand for transparency in monetary policy formulation and implementation. It is argued that central bank communication enhances market efficiency and calms down market volatility. This paper investigates to what extent that the People Bank of China’s (PBC) communication influences the Chinese money market. Three communication indexes were constructed and used in the empirical analysis. The findings indicate that the PBC’s communication has a significant effect on the country’s money market. Secondly, informal communication appears to be more effective than formal communication. Overall, the results suggest that policy makers and market observers could pay much more attention to the informal communications, such as speeches of the bank’s officials, than formal ones, such as the bank’s report and minutes.
- Business and Economics
Published inReview of Quantitative Finance and Accounting
CitationSU, S., AHMAD, A.H. and WOOD, J.A., 2019. How effective is central bank communication in emerging economies? An empirical analysis of the Chinese money markets responses to the People’s Bank of China’s policy communications. Review of Quantitative Finance and Accounting, 54: pp.1195–1219. doi:10.1007/s11156-019-00822-7.
PublisherSpringer (© The Authors)
- VoR (Version of Record)
Publisher statementThis work is made available according to the conditions of the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. Full details of this licence are available at: http://creativecommons.org/licenses/ by/4.0/
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