Monetary & Financial Economics

Central Bank Independence and Inflation in Selected Countries: The Role of Financial Systems and Institutional Quality

Articles in Press

Document Type : Original Article

Authors

jamal abdulnaser ali alakrafi 1
habib aghajani 2
Mohammad Mahdi Barghi Osqouei 3
sakineh sojudi 4

1 Tabriz university, faculty of economics and management. Tabriz, Iran

2 Faculty of Economics and Management, University of Tabriz, Tabriz, Iran.

3 Faculty of Economics and Management, University of Tabriz, Tabriz

4 Faculty of Economics and Management, University of Tabriz

https://doi.org/10.22067/mfe.2026.99339.1692
Abstract
Governments are constantly influenced by political parties with differing orientations, which creates the potential for political misuse of monetary policy. Such interference can disrupt monetary equilibrium, harm the real sector of the economy, and ultimately lead to economic fluctuations. Consequently, central bank independence is widely recognized in the economic literature as one of the most important institutional tools for controlling inflation. This study investigates the impact of central bank independence on inflation in selected oil-exporting countries over the period 2000–2023, while considering the role of institutional factors and financial systems. To address potential endogeneity concerns, the two-stage least squares (2SLS) method is employed. The findings indicate that central bank independence and institutional quality play a pivotal role in reducing inflation; however, the interaction between institutional and financial variables can generate complex and sometimes nonlinear effects. Accordingly, strengthening the practical and legal independence of central banks is recommended to curb inflation and enhance macroeconomic stability.

Keywords

Central Bank Independence
Inflation
Financial systems
Institutional Factors
Subjects
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Monetary & Financial Economics

Articles in Press, Accepted Manuscript
Available Online from 26 August 2026

  • Receive Date 13 June 2026
  • Revise Date 25 July 2026
  • Accept Date 19 August 2026

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