Currency Substitution and Financial Sector Developments in Cambodia

Kem Reat Viseth
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Kem Reat Viseth: https://crawford.anu.edu.au

International and Development Economics Working Papers from International and Development Economics

Abstract: The tendency to substitute domestic for foreign currency (as a way of holding wealth and a means of transaction for goods and services) is common throughout the world, and particularly so in countries attempting to overcome thin financial institutions or errant monetary policy. This paper uses monthly data to analyze the phenomenon of currency substitution in Cambodia during the recent economic and financial reform process, 1993-2001. Results show that there is a significant long run relationship between the expected rate of depreciation in market exchange rates and holdings of US dollars. The implications of this result for macroeconomic policy and broader financial sector developments in Cambodia are also examined.

JEL-codes: E52 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2001
New Economics Papers: this item is included in nep-ifn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:idc:wpaper:idec01-4

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