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Regional inflation and financial dollarisation

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  • Martin Brown

    ()
    (Swiss Institute of Banking and Finance, University of St.Gallen)

  • Ralph De Haas

    ()
    (EBRD)

  • Vladimir Sokolov

    ()
    (Higher School of Economics)

Abstract

In this paper, we exploit variation in consumer price inflation across 71 Russian regions to examine the relationship between the perceived stability of the local currency and financial dollarisation. Our results show that regions with higher inflation experience an increase in the dollarisation of household deposits and a decrease in the dollarisation of (long-term) household credit. The negative impact of inflation on credit dollarisation is weaker in regions with less integrated banking markets, suggesting that the asset-liability management of banks constrains the currency-portfolio choices of households.

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Bibliographic Info

Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 163.

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Length: 22 pages
Date of creation: Nov 2013
Date of revision:
Publication status: Published in Working papers 163, European Bank for Reconstruction and Development
Handle: RePEc:ebd:wpaper:163

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Web page: http://www.ebrd.com/pages/research/publications/workingpapers.shtml
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Keywords: Financial dollarisation; financial integration; regional inflation;

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References

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  23. Basso, Henrique S. & Calvo-Gonzalez, Oscar & Jurgilas, Marius, 2007. "Financial dollarization: the role of banks and interest rates," Working Paper Series 0748, European Central Bank.
  24. Konstantin Gluschenko, 2010. "Price mobility of locations," Applied Economics Letters, Taylor & Francis Journals, vol. 17(1), pages 99-103.
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