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Regional Inflation, Financial Integration and Dollarization (This is a revision of CentER DP 2013-073)

Ralph De Haas (), Martin Brown () and V. Sokolov

No 2015-012, Discussion Paper from Tilburg University, Center for Economic Research

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 the dollarization of household deposits and a decrease in the dollarization of loans to households and to firms in non-tradable sectors. The impact of inflation on credit dollarization is weaker in regions with less integrated banking markets. This suggests that the currency-portfolio choices of households and firms may be constrained by the asset-liability management of banks.

Keywords: Financial dollarization; Financial Integration; regional inflation (search for similar items in EconPapers)
JEL-codes: E31 E42 E44 F36 G21 G22 G24 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cis, nep-mac, nep-mon and nep-tra
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