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Financial Dollarization: Short-Run Determinants in Transition Economies

Kyriakos Neanidis () and Christos Savva ()

Centre for Growth and Business Cycle Research Discussion Paper Series from Economics, The University of Manchester

Abstract: This paper examines the determinants of financial dollarization in transition economies from a short-run perspective. Using 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 short-run effects of depreciation 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, international financial integration, and institutional quality; and (c) both types of dollarization are affected by interest rate differentials and deviations from desired dollarization.

Pages: 42 pages
Date: 2009
New Economics Papers: this item is included in nep-mac and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:man:cgbcrp:113

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