National culture and central bank transparency: Cross-country evidence

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 in response to a public demand for higher accountability of independent central banks, the degree of transparency continues to vary across countries. 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.