Olaniran, Abeeb OlatundeNdako, Umar B.2025-12-022025-12-022025-10-08Olaniran, Abeeb O. and Ndako, Umar B. (2025) "Independence of Central Banks in Nondemocratic Regimes: Implications for Price Stability," Bulletin of Monetary Economics and Banking: vol. 28: no. 3, art. 1. pp. 333-348. DOI: https://doi.org/10.59091/2460-9196.2571.1410-8046 (print)2460-9196 (online)10.59091/2460-9196.2571http://hdl.handle.net/2263/107022This study examines the impact of central bank independence on inflation in nondemocratic regimes, with a specific focus on the differences between Islamic and nonIslamic groups. It utilizes nonstationary heterogeneous panels to estimate both the longrun and short-run responses of inflation to central bank independence. Additionally, it employs a panel smooth transition regression model to identify any potential threshold effects in this relationship. Our findings reveal an inverse relationship between central bank independence and inflation rates for both groups in the long run. Our result suggests that non-Islamic authoritarian countries may struggle more than Islamic ones to maintain price stability through interest rate channels, which could explain their increasing adoption of a zero interest rate policy. Furthermore, we find evidence of threshold effects that, if overlooked, could result in biased conclusions.en© Bulletin of Monetary Economics and Banking. This work is licensed under a Creative Commons Attribution-Non Commercial 4.0 International License.Central bank independenceInflationIslamic authoritarian regimeNon-Islamic authoritarian regimeNonstationary heterogeneous panelsPanel smooth transition regressionArticle