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Dollarization in Tanzania: empirical evidence and cross-country experience

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  • Kessy, Pantaleo

Abstract

The use of U.S dollar as unit of account, medium of exchange and store of value in Tanzania has raised concerns among policy makers and the general public. This paper attempts to shed some light on the key stylized facts of dollarization in Tanzania and the EAC region. We show that compared to other EAC countries, financial dollarization in Tanzania is high, but steadily declining. We also present some evidence of creeping transaction dollarization particularly in the education sector, apartment rentals in some parts of major cities and a few imported consumer goods such as laptops and pay TV services. An empirical analysis of the determinants of financial dollarization is provided for the period 2001 to 2009. Based on the findings and drawing from the experience of other countries around the world, we propose some policy measures to deal with prevalence of dollarization in the country.

Suggested Citation

  • Kessy, Pantaleo, 2011. "Dollarization in Tanzania: empirical evidence and cross-country experience," LSE Research Online Documents on Economics 36381, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:36381
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    References listed on IDEAS

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    Cited by:

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    2. Raheem, Ibrahim & Ajide, Kazeem, 2020. "The journey towards dollarization: the role of the tourism industry," MPRA Paper 105505, University Library of Munich, Germany.
    3. Abu Bakarr TARAWALIE & Amadu JALLOH, 2020. "Dollarization in Sierra Leone: Evidence and Some Policy Options," Applied Economics and Finance, Redfame publishing, vol. 7(4), pages 160-168, July.
    4. Ajide, Kazeem B. & Raheem, Ibrahim D. & Asongu, Simplice A., 2019. "Dollarization and the “unbundling” of globalization in sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 47(C), pages 398-409.
    5. Simplice Asongu & Ibrahim Raheem & Venessa Tchamyou, 2018. "Information asymmetry and financial dollarization in sub-Saharan Africa," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 9(2), pages 231-249, June.
    6. Yegnanew A. Shiferaw, 2019. "Multivariate Analysis of East African Currency Exchange Rate Dynamics," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 587-610, November.
    7. Raheem, Ibrahim Dolapo & Asongu, Simplice A., 2018. "Extending the determinants of dollarization in sub-Saharan Africa: The role of easy access to foreign exchange earnings," Research in International Business and Finance, Elsevier, vol. 45(C), pages 106-120.
    8. Mr. Andrew Berg & Ms. Luisa Charry & Mr. Rafael A Portillo & Mr. Jan Vlcek, 2013. "The Monetary Transmission Mechanism in the Tropics: A Narrative Approach," IMF Working Papers 2013/197, International Monetary Fund.
    9. Mr. Juan S Corrales & Patrick A. Imam, 2019. "Financial Dollarization of Households and Firms: Does It Differ?," IMF Working Papers 2019/019, International Monetary Fund.

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    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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