Dollarization vs. bitcoinization in Türkiye: Which is more dangerous for the financial market?

George M. Jabbour and Layal Mansour-Ichrakieh

Journal of International Financial Markets, Institutions and Money, 2025, vol. 100, issue C

Abstract: While bitcoinization and dollarization share similar theoretical economic definitions, their effects on the financial market differ. We employ a vector autoregressive model and Granger causality test to examine the causal relationships between Bitcoin demand, the dollarization rate, and the financial market in Türkiye. The results indicate that neither bitcoinization nor dollarization directly causes a financial crisis in Türkiye. However, when breaking down the financial market into its three components —the banking sector, the stock market, and the foreign exchange market — we find a bidirectional causality between bitcoinization and the banking sector, and between dollarization and the exchange market.

Keywords: Türkiye (Turkey); Dollarization; Bitcoin; VAR; Causality Tests; Financial Market (search for similar items in EconPapers)
JEL-codes: C32 E42 E44 F31 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:100:y:2025:i:c:s104244312500006x

DOI: 10.1016/j.intfin.2025.102116

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