Central bank communication in the media and investor sentiment

Bennani, Hamza

doi:10.1016/j.jebo.2020.05.022

Cited by 21 publications

(10 citation statements)

References 53 publications

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“…Another factors that affects investor sentiment is media attention (Peress and Fang, 2009). Moreover, at least one study found that an overconfident Fed chair is significantly associated with higher investor sentiment (Bennani, 2020). In addition, other studies analyzed how the coronavirus pandemic affected investor sentiment (Sun et al, 2021).…”

Section: Investor Sentimentmentioning

confidence: 99%

“…From related studies (Lewellen, 2011;Bennani, 2020;Sun et al, 2021), a series of control variables are selected to reduce the effects of other factors. For instance, when investing in company stock, investors may consider fundamental corporate information, such as enterprise ownership (SOE), enterprise scale (SIZE), years of establishment (AGE); company profitability and management activities, including profit margin on net assets (ROE), asset-liability ratio (LEV), future development opportunities (GROW), operating net cash flow (CRAA), capital investment (INV), management expense ratio (ADM), audit costs (DCOST), and proportion of independent directors (IDRATIO).…”

Section: Variablesmentioning

confidence: 99%

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The Psychological Impact of Smog Pollution on Investors

Liu

Zhang

et al. 2022

Front. Psychol.

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Section: Investor Sentimentmentioning

confidence: 99%

Section: Variablesmentioning

confidence: 99%

The Psychological Impact of Smog Pollution on Investors

Liu

Zhang

et al. 2022

Front. Psychol.

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“…The predominance of central bank communication in the unconventional monetary policies of national central banks has attracted the attention of scholars. They have launched a deep inquiry into the effectiveness of central bank communication and a communication approach based on clarity and transparency [10][11][12], tone of voice mood [13][14][15], language style [16], and verbal and written tools [17,18]. Among them, written forms of communication such as the Monetary Policy Implementation Report, the Financial Stability Report, and the Financial Statistics Report, and press releases have received much attention and research, mainly around how to guide interest rate expectations [17,[19][20][21], exchange rate expectations [22], and inflation expectations [23].…”

Section: Central Bank Communication and Bank Risk-takingmentioning

confidence: 99%

Central bank communication, shadow banking, and bank risk-taking: Theoretical model and PVAR empirical evidence

2022

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The rapid development of Chinese shadow banking, which relies on the banking system, significantly impacts nonneutral bank risk-taking. Central bank communication also plays a vital role in risk prevention and mitigation in the banking system in a modern central banking system. To address the issues of central bank communication, shadow banking, and bank risk-taking, we construct a new theoretical model that includes shadow banking based on the M-S model. Based on the central bank written communication index measured by the Monetary Policy Implementation Report 2009–2019 and balanced panel data of 35 listed banks, we design an empirical PVAR model. This study finds that central bank communication regarding domestic easing economy and policy positively affects bank risk-taking, while central bank communication and mechanism exists in China. Moreover, the growth rate of shadow banking size also positively encourages bank risk-taking. Furthermore, central bank communication regarding foreign policy is negatively related to bank risk-taking in the robustness test, supporting the above findings. The analysis of equity heterogeneity shows that the positive effect of central bank communication on bank risk-taking in shadow banking is more pronounced in small and medium-sized shareholdings. Further analyzing the economic consequences of central bank communication and shadow banking on bank risk-taking, we find that banks’ risk-taking positively affects their share of noninterest income and total asset size.

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“…(see Hanousek, Kočenda and Kutan (2009), Hayo and Neuenkirch (2012), Sun (2020), Brubakk, Ter Ellen and Xu (2021), Breitenlechner, Gründler and Scharler (2021)). The channels of transmission include covered or uncovered interest rates parity relationships in the foreign exchange market, discounting of future cash flows mechanism in the bonds market or the changing dynamics of capital flows in the stock market, which may be triggered by the central banks' decisions (see Binder (2017), Weber (2019), Lamla and Vinogradov (2019), Hüning (2020), Bennani (2020), Beutel, Metiu and Stockerl (2021), among others).…”

Section: Introductionmentioning

confidence: 99%

Central bank's communication and markets' reactions: Polish evidence

Brzeszczyński

Gajdka

Schabek

et al. 2021

IJOEM

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PurposeThis study contributes to the pool of knowledge about the impact of monetary policy communication of central banks on financial instruments' prices and assets' value in emerging markets.Design/methodology/approachEmpirical analysis is executed using the National Bank of Poland (NBP) announcements about its monetary policy covering the data from the broad financial market in its three main segments: stock market, foreign exchange market and bonds market. The reactions are measured relative to the changes in the NBP announcements and also with respect to investors' expectations. Autoregressive conditional heteroscedasticity (ARCH) models with dummy variables are used as the main methodological tool.FindingsBonds market and foreign exchange market are the most sensitive market segments, while interest rate and money supply are the most influential types of announcements. The changes of the revealed new macroeconomic figures had more impact on assets' prices movements than the deviations from their expectations. Moreover, greater diversity of the Monetary Policy Council (MPC) members' opinions on the voted motions, captured in the MPC voting reports, is associated with more cases of statistically significant NBP communication events.Practical implicationsThe findings have direct relevance for fund managers, portfolio analysts, investors and also for financial market regulators.Originality/valueThe results provide novel evidence about how the emerging financial market responds to monetary policy announcements. They help understand the nature of the impact of public information on financial assets' valuation and on movements of their prices, analysed comprehensively in three market segments, in the emerging market environment.

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Central bank communication in the media and investor sentiment

Cited by 21 publications

References 53 publications

The Psychological Impact of Smog Pollution on Investors

The Psychological Impact of Smog Pollution on Investors

Central bank communication, shadow banking, and bank risk-taking: Theoretical model and PVAR empirical evidence

Central bank's communication and markets' reactions: Polish evidence

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