Author: S M Shamim-Ur- Rashid
Rashid, S M Shamim-Ur-, 2021 Governance and independence in the case of the Central Bank of Bangladesh: Insights from a comparative study, Flinders University, College of Business, Government and Law
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The decisions made by central banks or monetary authorities impact upon national employment, price levels and economic growth. Accordingly, governments are typically considerably concerned with the performance of these institutions. Conflict arises when the government wants to have greater control and direct the monetary policy based on exclusively political considerations – which tend to be short term in nature. The central bank considers the long-term economic welfare instead of short-term economic boosts. Central bank independence (CBI) is, therefore, thought to be the solution to this strained relationship. In the case of the Central Bank of Bangladesh, critics allege that it is too susceptible to political influence from the government, and its poor governance situation is emanating from its lack of independence. This study aims to analyse the governance and organisational structures of three central bank cases – of New Zealand, Australia, and China – to ascertain whether more independence could in fact improve the governance of the Central Bank of Bangladesh and make it a better monetary policy authority. After an extensive review of extant literature on central bank governance, this study uses a comparative case study methodology with primarily qualitative data analysis. The case study analysis suggests that CBI is not the solution for poor governance situation in the Central Bank of Bangladesh. Instead, the quality of its governing board and competencies of central bankers must be enhanced to improve its governance. The study also urges using an institutional lens to view the context wherein a central bank operates and considering the difference between its actual and statutory independence. CBI is a volatile concept, and it cannot be thought of as the ultimate solution to improving governance of a central bank, especially in a developing country context.
Keywords: central bank governance, central bank independence, CBI, central bank politics, central bank organisational structure, central bank design
Subject: Policy and Administration thesis
Thesis type: Masters
Completed: 2021
School: College of Business, Government and Law
Supervisor: Dr Jodie Curth-Bibb