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Dollarization and External Sustainability of Turkey

Amira Karimova (), Ahmet Caliskan () and Jamshid Karimov ()
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Amira Karimova: Fatih University, Turkey
Ahmet Caliskan: Fatih University, Turkey
Jamshid Karimov: Nigerian Turkish Nile University, Nigeria

Eurasian Journal of Economics and Finance, 2015, vol. 3, issue 2, 1-11

Abstract: In this paper, we attempt to explain that expanding current account deficit of Turkey can be a highlighting signal of its dependency on foreign capital inflows. When private non-financial firms borrow in foreign currency, they face currency mismatch in their balance sheets. Statistical analyses of aggregated balance sheet data of non-financial sector revealed that the negative gap between firms’ dollarized assets and liabilities has been increasing considerably in Turkey. This creates financial exposure by private non-financial sector. Given a high level of liability dollarization by firms in Turkish economy, it is exposed dramatically to the changes in external and domestic conditions.

Keywords: Dollarization; Balance Sheets; Capital Flows; External Exposure (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:ejn:ejefjr:v:3:y:2015:i:2:p:1-11