Why Study Central Bank Governance

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Dissertation Concept Paper

I. Why Study Central Bank Governance in Asia?
A financial crisis always raised an essential question about the role of the central banks (CBs) in promoting banking stability. One of the important lessons of the crisis is that central banks will unavoidably be involved during the occurrence of a banking crisis since the CBs should be able to provide large amounts of fund to recover the banking system from the crisis.
Most of Asian countries have a central bank (or monetary authority) that conducts monetary policy to pursue a single or multiple objectives. The primary objective is to maintain price stability, however for banking stability in the country, a CB could do some tasks that may be inconsistent with its core goal. These may include bailing out the insolvent banks (Cukierman, Webb, and Neyati, 1994). All of the tasks influence the stability of the banking sector directly or indirectly and thus are also related to a banking crisis.
The ultimate influential role of the CBs depends on the level of CBs governance. The governance of CB consists of three essential elements, independency, accountability and transparency (Amtenbrink, 1999; Dincer and Eichengreen, 2014). Those three elements are fundamental values for governing the CBs, and should be used together when CBs perform their roles and responsibilities. Between 1998 and 2010, CBs in Asian countries has shown an increasing trend in transparency (Dincer and Eichengreen, 2014). From
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