Central Bank Communication on Financial Stability. (1st July 2013)

• Record Type: Journal Article
• Authors: Born, Benjamin; Ehrmann, Michael; Fratzscher, Marcel
• Is Part Of: Economic journal. Volume 124:Number 577(2014)
• Page Start: 701
• Page End: 734
• Publication Date: 2013-07-01
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1111/ecoj.12039
• Languages: English
• ISSNs: 0013-0133

Abstract

<abstract abstract-type="main" id="ecoj12039-abs-0001"> <title> <x xml:space="preserve">Abstract</x> </title> <p>Central banks regularly communicate about financial stability issues. This article asks how such communications affect financial markets, based on a unique dataset covering more than 1, 000 releases of Financial Stability Reports (FSRs) and speeches by 37 central banks over the past 14 years. The findings suggest that optimistic FSRs lead to significant and potentially long‐lasting positive abnormal stock market returns, whereas no such effect is found for pessimistic FSRs. Speeches and interviews, in contrast, have smaller effects on market returns during tranquil times but have been influential during the 2007–10 global financial crisis.</p> </abstract>