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Financial dollarization: Short-run determinants in transition economies

Kyriakos Neanidis and Christos Savva ()

Journal of Banking & Finance, 2009, vol. 33, issue 10, 1860-1873

Abstract: This paper examines the determinants of financial dollarization in transition economies from a short-run perspective. Using aggregate monthly data of deposit and loan dollarization we study the drivers of short-term fluctuations in dollarization and test their importance at different levels of dollarization. The results provide evidence that (a) the positive (negative) short-run effects of depreciation (monetary expansion) on deposit dollarization are exacerbated in high-dollarization countries; (b) short-run loan dollarization is mainly driven by banks matching of domestic loans and deposits, currency matching of assets and liabilities, international financial integration, and institutional quality; and (c) both types of short-run dollarization are affected by interest rate differentials and deviations from desired dollarization.

Keywords: Currency; risk; Financial; dollarization; Short-run; variations; Transition; economies (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (51)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:33:y:2009:i:10:p:1860-1873

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