Financial Dollarization and European Union Membership
We analyze the effect of European Union (EU) membership on financial dollarization for the Central and Eastern European countries. Using a unique monthly dataset that spans about two decades, we find that both the accession process toward EU membership and EU entry have a direct impact on deposit and loan dollarization. EU membership reduces deposit dollarization while it increases loan dollarization. The negative effect on deposit dollarization captures the increased confidence of the private sector in the domestic currency as they consider the EU admission process to reflect their government’s commitment in promoting policies of long-run currency stability. The positive impact on credit dollarization is the outcome of a greater convergence of exchange rates to the euro and the subsequent anticipation for a lower currency risk, which diminishes the cost of foreign currency borrowing.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/our-research/centre-for-growth-and-business-cycle-research/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kyriakos C. Neanidis & Christos S. Savva, 2009.
"Financial Dollarization: Short-Run Determinants in Transition Economies,"
Centre for Growth and Business Cycle Research Discussion Paper Series
113, Economics, The Univeristy of Manchester.
- Neanidis, Kyriakos C. & Savva, Christos S., 2009. "Financial dollarization: Short-run determinants in transition economies," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1860-1873, October.
- Eduardo Levy-Yeyati, 2004.
"FINANCIAL DOLLARIZATION: Evaluating the consequences,"
Econometric Society 2004 Latin American Meetings
184, Econometric Society.
- Eduardo Levy Yeyati, 2006. "Financial dollarization: evaluating the consequences," Economic Policy, CEPR;CES;MSH, vol. 21(45), pages 61-118, 01.
- Eduardo Levy Yeyati, 2005. "Financial Dollarisation: Evaluating The Consequences," Business School Working Papers findollarisation, Universidad Torcuato Di Tella.
- Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2006.
"The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004,"
CEPR Discussion Papers
5644, C.E.P.R. Discussion Papers.
- Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
- Philip R. Lane & Gian-Maria Milesi-Ferretti, 2006. "The External Wealth of Nations Mark II; Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004," IMF Working Papers 06/69, International Monetary Fund.
- Philip R. Lane & Gian Maria Milesi-Ferretti, 2006. "The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities,1970–2004," The Institute for International Integration Studies Discussion Paper Series iiisdp126, IIIS.
- Hans Genberg, 2002. "Currency Substitution in Anticipation of EU Accession," IHEID Working Papers 08-2002, Economics Section, The Graduate Institute of International Studies.
- Galiani, Sebastian & Levy Yeyati, Eduardo & Schargrodsky, Ernesto, 2003.
"Financial dollarization and debt deflation under a currency board,"
Emerging Markets Review,
Elsevier, vol. 4(4), pages 340-367, December.
- Eduardo Levy Yeyati & Ernesto Schargrodsky & Sebastián Galiani, 2003. "Finantial Dollarization and Debt Deflation under a Currency Board," Business School Working Papers tres, Universidad Torcuato Di Tella.
- Sebastian Galiani & Eduardo Levy Yeyati & Ernesto Schargrodsky, 2003. "Financial Dollarization and Debt Deflation under a Currency Board," Working Papers 64, Universidad de San Andres, Departamento de Economia, revised Nov 2003.
- Patrick Honohan, 2007.
"Dollarization and Exchange Rate Fluctuations,"
The Institute for International Integration Studies Discussion Paper Series
- Honig, Adam, 2009. "Dollarization, exchange rate regimes and government quality," Journal of International Money and Finance, Elsevier, vol. 28(2), pages 198-214, March.
- Luca, Alina & Petrova, Iva, 2008. "What drives credit dollarization in transition economies?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 858-869, May.
- Carlos Óscar Arteta, 2003.
"Exchange Rate Regimes and Financial Dollarization: Does Flexibility Reduce Bank Currency Mismatches?,"
- Carlos O. Arteta, 2002. "Exchange rate regimes and financial dollarization: does flexibility reduce bank currency mismatches?," International Finance Discussion Papers 738, Board of Governors of the Federal Reserve System (U.S.).
- Ize, Alain & Yeyati, Eduardo Levy, 2003. "Financial dollarization," Journal of International Economics, Elsevier, vol. 59(2), pages 323-347, March.
- 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.
When requesting a correction, please mention this item's handle: RePEc:man:cgbcrp:143. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marianne Sensier)
If references are entirely missing, you can add them using this form.