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MEASURING CENTRAL BANK INDEPENDENCE IN MALAWI: THE NEW INDEX OF INSTITUTIONAL QUALITY APPROACH

European Journal of Economic and Financial Research

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Title MEASURING CENTRAL BANK INDEPENDENCE IN MALAWI: THE NEW INDEX OF INSTITUTIONAL QUALITY APPROACH
 
Creator Kamanga, Frank
Chikonda, Mtendere
 
Subject index of institutional quality methodology, central bank, Reserve Bank of Malawi, central bank independence, inflation
 
Description This study applied the Index of Institutional Quality (IQ) methodology to measure the level of independence of the Reserve Bank of Malawi (central bank) and examine its impact on inflation. The IQ methodology assesses independence of central banks based on their actual practices. The methodology is suitable for developing countries whose practices do not fully conform to the laws of Banks that are in place. The study finds that the average independence index of the Reserve Bank of Malawi (RBM) is 15.1, which is more than half below the total index value of 36. This clearly shows that the RBM is not convincingly independent. Although the results show an above-average value for index of monetary policy independence, indications are that the RBM is not free from political pressures as evidenced by below-average values for indices of political and fiscal independence. Using Ordinary Least Square (OLS), the results further show that the low degree of independence by the RBM has contributed to high inflation in Malawi.  JEL: E01, E42, G38  Article visualizations:
 
Publisher European Journal of Economic and Financial Research
 
Contributor —
 
Date 2017-03-13
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier https://oapub.org/soc/index.php/EJEFR/article/view/68
 
Source European Journal of Economic and Financial Research; Volume 2, Issue 1, 2017
 
Language eng
 
Relation https://oapub.org/soc/index.php/EJEFR/article/view/68/194
https://oapub.org/soc/index.php/EJEFR/article/view/68/195
https://oapub.org/soc/index.php/EJEFR/article/view/68/196
 
Rights Copyright (c) 2017 Frank Kamanga, Mtendere Chikonda