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Regional Inflation and Financial Dollarization

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  • Brown, Martin

    ()

  • De Haas, Ralph

    ()

  • Sokolov, Vladimir

    ()

Abstract

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 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 (long-term) household credit. The negative impact of inflation on credit dollarization 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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File URL: http://www1.vwa.unisg.ch/RePEc/usg/sfwpfi/WPF-1327.pdf
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Bibliographic Info

Paper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1327.

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Length: 25 pages
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Handle: RePEc:usg:sfwpfi:2013:27

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Keywords: Financial dollarization; financial integration; regional inflation;

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