Central bank independence and stock market returns in emerging economies

We investigate the effect of central bank independence on stock market returns in emerging economies. We find evidence for a positive overall effect, but economic independence of the central bank appears to be more relevant than political independence.

► We estimate the effect of central bank independence on stock market returns. ► The sample comprises emerging economies. ► The overall effect of central bank independence on stock market returns is positive. ► Economic independence is more important than political independence.