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Regional Inflation and Financial Dollarization

Martin Brown (), Ralph De Haas and Vladimir Sokolov

No 22, HIT-REFINED Working Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We exploit variation in consumer price inflation across 71 Russian regions to examine the relationship between the perceived stability of the domestic currency and financial dollarization. Our results show that regions with higher inflation experience an increase in deposit dollarization and a decrease in the dollarization of loans to households and firms in non-tradable sectors. The negative impact of inflation on credit dollarization is weaker in regions with less integrated banking markets. This suggests that the asset-liability management of banks constrains the currency-portfolio choices of both households and firms without a natural currency hedge.

Keywords: Financial dollarization; financial integration; regional inflation (search for similar items in EconPapers)
JEL-codes: E31 E42 E44 F36 G21 P22 P24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-mac, nep-mon and nep-tra
Date: 2015-06
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http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/27309/1/wp022.pdf

Related works:
Working Paper: Regional Inflation and Financial Dollarization (2013) Downloads
Working Paper: Regional Inflation and Financial Dollarization (2013) Downloads
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