Basso, Henrique S., Calvo-Gonzalez, Oscar and Jurgilas, Marius (2011) Financial dollarization : the role of foreign-owned banks and interest rates. Journal of Banking & Finance, Vol.35 (No.4). pp. 794-806. doi:10.1016/j.jbankfin.2010.11.018 ISSN 0378-4266.

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Abstract

Why in many economies households and firms borrow and make deposits in foreign currency? Expanding on the existing literature, our framework addresses this question allowing for interest rate differentials and access to foreign funds to play a role in explaining this process of asset substitution or financial dollarization. Using a newly compiled data set on transition economies and employing a standard panel as well as a panel-VAR methodology we find that increasing access to foreign funds leads to higher credit dollarization, while it decreases deposit dollarization. Interest rate differentials matter for the dollarization of both loans and deposits. (C) 2010 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Journal of Banking & Finance
Publisher:	Elsevier Science BV
ISSN:	0378-4266
Official Date:	April 2011
Dates:	Date Event April 2011 Published
Volume:	Vol.35
Number:	No.4
Page Range:	pp. 794-806
DOI:	10.1016/j.jbankfin.2010.11.018
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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