Dollarization of the banking system: good or bad?

Gianni De Nicolo, Patrick Honohan and Alain Ize ()

No 3116, Policy Research Working Paper Series from The World Bank

Abstract: De Nicol? Honohan, and Ize assess the benefits and risks associated with dollarization of the banking system. The authors provide novel empirical evidence on the determinants of dollarization, its role in promoting financial development, and on whether dollarization is associated with financial instability. They find that: The credibility of macroeconomic policy and the quality of institutions are both key determinants of cross-country variations in dollarization. Dollarization is likely to promote financial deepening only in a high inflation environment. Financial instability is likely higher in dollarized economies. The authors discuss the implications of these findings for financial sector and monetary policies.

Keywords: Banks&Banking Reform; Fiscal&Monetary Policy; Economic Theory&Research; Payment Systems&Infrastructure; Financial Intermediation; Banks&Banking Reform; Macroeconomic Management; Fiscal&Monetary Policy; Financial Economics; Financial Intermediation (search for similar items in EconPapers)
Date: 2003-08-31
New Economics Papers: this item is included in nep-cba and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (110)

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Related works:
Working Paper: Dollarization of the Banking System: Good or Bad? (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:3116

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