Currency Substitution: The Use of Hong Kong Dollars in Southern China

Kui Yin Cheung () and Chengze Simon Fan
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Kui Yin Cheung: Lingnan University, Postal: Department of Economics, Lingnan University, Tuen Mun,N.T., Hong Kong
Chengze Simon Fan: Lingnan University, Postal: Department of Economics, Lingnan University, Tuen Mun,N.T., Hong Kong

Journal of Economic Integration, 2002, vol. 17, 596-607

Abstract:

This paper studies the circulation of Hong Kong dollars in the Chinese Mainland. It first estimates the amount of Hong Kong dollars circulating in southern China in the last fifteen years. The regression analysis indicates that the growth rate of Hong Kongs foreign direct investment in China and the growth rate of trade volume between Hong Kong and China are some of the main determinants that contribute to the widespread use of Hong Kong dollars in southern China. The difference of real returns between Hong Kong dollar denominated assets and Chinese Renminbi denominated assets, however, has no effect on the amount of Hong Kong dollars circulating in China.

Keywords: Currency Substitution; Hong Kong Dollars; Hong Kong (search for similar items in EconPapers)
JEL-codes: E41 F36 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0210

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