Central Bank Independence and Governance : Definitions and Modelling

Central bank independence and governance (CBIG) is a term subject to conflicting definitions and modelling and so its related studies are difficult to compare. This paper therefore focuses on developing of a workable definition, and a robust CBIG index model by identifying its key determinants. It also examines various independence measurement tools such as ranking and index. The index model proposed centres on key central bank independence and corporate governance issues, such as, legal, political, price stability objectives, exchange rate policy, monetary policy and deficit financing and finally, transparency and accountability