Press Freedom and Systemic Risk

Abstract

This paper investigates the role of press freedom on systemic risk. We use an international sample of banks and a comprehensive measure of press freedom that incorporates press freedom country ranking, the freedom of expression index and the number of killings of journalists. Our empirical evidence suggests that press freedom is associated with lower systemic risk in the banking sector. We show that this relationship is mitigated during the upward phase of the economic cycle, and enhanced during banking crises. Our findings hold when addressing potential endogeneity problems and when accounting for additional macroeconomic and firm controls.

Keywords: Press Freedom, Media freedom, Bank stability, Systemic risk

JEL Classification: G12, G14, G15, G21