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FX intervention and domestic credit in a partially dollarized economy: Evidence using microdata from Peru

Author

Listed:
  • Ceron, Marcos

    (Banco Central de Reserva del Perú)

  • Nivin, Rafael

    (Banco Central de Reserva del Perú)

  • Yamunaque, Diego

    (Banco Central de Reserva del Perú)

Abstract

In this work we study the impact of FX interventions on Credit growth in Peru. Using Panel data at the firm-bank level from the Peruvian Credit Registry we find that purchases of dollars by the Central Bank are associated with reductions on the stock of credit held by Medium, Big and Corporate Firms during periods of substantial capital inflows in the Peruvian economy. We also found that the impact is stronger for firms with a higher level of debt dollarization. These results suggest that FX interventions can be seen as an additional tool for Financial stability, especially in times of large inflows of capital.

Suggested Citation

  • Ceron, Marcos & Nivin, Rafael & Yamunaque, Diego, 2023. "FX intervention and domestic credit in a partially dollarized economy: Evidence using microdata from Peru," Working Papers 2023-009, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2023-009
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    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2023/documento-de-trabajo-009-2023.pdf
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    Cited by:

    1. Carrasco, Alex & Florián Hoyle, David, 2025. "External shocks and FX intervention policy in financially dollarized economies," Journal of Macroeconomics, Elsevier, vol. 84(C).

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    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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