A QUALITATIVE EXPLORATION OF EUROIZATION AND ITS RISKS AT BANK LEVEL

Albulena Xhelili (), Iraj Hashi () and Valentin Toci ()
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Albulena Xhelili: University of Prishtina, Republic of Kosovo
Iraj Hashi: Staffordshire University, United Kingdom
Valentin Toci: University of Prishtina, Republic of Kosovo

Economic Thought and Practice, 2016, vol. 25, issue 2, 397-420

Abstract: Euroization, which is widely considered a defining characteristic of the banking system in transition economies, has been ignored in the qualitative research literature. This paper aims at exploring euroization and its related risks at bank level through a qualitative analysis in two South East European countries. The research was conducted through semi-structured interviews with risk managers of banks in order to gain a better understanding of this phenomenon from a bank’s perspective. The main finding is that macroprudential policy, widely considered a useful response to global financial crisis, is an important determinant of euroization. In addition, the analysis revealed that banks in these countries seem to be concerned with hedging against the risks associated with euroization; however they seem to overly rely on the natural hedging associated with one group of customers, exporters. In terms of the other drivers of euroization the findings of this analysis support the conventional view that deposit euroization and the interest rate differential were the main determinants of credit euroization in these countries.

Keywords: Euroization; Banking; Transition Economies; Macroprudential Policy; Qualitative research (search for similar items in EconPapers)
JEL-codes: E51 E58 G21 G28 (search for similar items in EconPapers)
Date: 2016
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