Empirical Analysis on the Impact Factors of Currency Substitution in China

Ping Yi (), Chuang Zhao and Xiao-ling Luo
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Ping Yi: Tongji University
Chuang Zhao: Jilin University
Xiao-ling Luo: Hunan International Economics University

Chapter Chapter 109 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 1039-1046 from Springer

Abstract: Abstract Since American financial crisis erupted in 2008, international monetary system is under the pressure of reforming, while the superiority of RMB is recognized increasingly. After exchange rate reformed, RMB circulates in neighboring countries or regions widely. As for the cross-border circulation, the paper attempts to construct an econometric model based on western currency substitution theory, and makes an empirical analysis on the impact factors of currency substitution in China through OLS and principal component method. Results show that interest rate differential is the greatest influencing factor, followed by exchange rate while economic growth rate is indistinctive. Finally, constructive political suggestions are given.

Keywords: Currency substitution; OLS; Principal component method; Empirical analysis (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-38433-2_109

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DOI: 10.1007/978-3-642-38433-2_109

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