Analyzing the impact of central bank transparency on financial market uncertainty (money and capital)

Document Type : Original Article

Authors

1 Economic Sciences, Faculty of Economics and Social Sciences, Shahid Chamran University, Ahvaz, Iran

2 Professor of Economics, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran.e.anvari@scu.ac.ir.

3 Associate Professor, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran

10.48308/jem.2026.242646.2032

Abstract

One of the consequences of central bank opaqueness (lack of transparency) is financial market uncertainty, which can lead to reduced economic growth by influencing the decisions of consumers and producers. Transparency regarding future policy goals and the central bank's reaction in various economic conditions reduces uncertainty and helps households and firms to predict the central bank's actions and the impacts of monetary policy.
In the present study, the effect of the central bank's transparency on financial market uncertainty (money and capital markets) in Iran was investigated using data and information from the Central Bank of Iran and the World Bank for the period 1350–1400 (Hijri Shamsi calendar). The Generalized Autoregressive Conditional Heteroskedasticity (GARCH) models were used to estimate financial market uncertainty (money and capital markets), and the Autoregressive Distributed Lag (ARDL) model was employed to examine the impact of central bank transparency on financial market uncertainty.
The analysis results indicated a negative and significant relationship between central bank transparency and financial market uncertainty in Iran. According to these findings, an increase in central bank transparency leads to a reduction in the level of uncertainty in the financial market, and vice versa.

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