IDEAS home Printed from https://ideas.repec.org/p/tek/wpaper/2005-6.html
   My bibliography  Save this paper

Financial Dollarization, (De)Dollarization and The Turkish Experience

Author

Listed:
  • Gokhan Yilmaz

    (Central Bank of the Republic of Turkey)

Abstract

This paper briefly discusses the causes and consequences of financial dollarization with special reference to the recent Turkish experience. Most developing countries have a limited,unofficial form of dollarization, which makes them vulnerable to external shocks through currency mismatches. Financial dollarization can limit the scope of macroeconomic policies and cause fear of floating. Consequently, dedollarization policies are now shifting from a generally passive stance “learning to live with it” type approach to a more active stance such as “carrot and stick” approach. This paper also presents a composite financial dollarization index for Turkey along with a brief discussion of corporate sector debt dollarization. The recent Turkish experience towards endogenous dedollarization appears to be consistent with the view that dedollarization can also be viewed as a side effect of prudent fiscal and monetary policies. Although the dollarization composite index is on a decreasing trend, it is however still high. Therefore, an active dedollarization strategy associated with a sound macroeconomic policy stance should be considered to support the implementation of a Full Fledged Inflation Targeting Regime in the near future.

Suggested Citation

  • Gokhan Yilmaz, 2005. "Financial Dollarization, (De)Dollarization and The Turkish Experience," Working Papers 2005/6, Turkish Economic Association.
  • Handle: RePEc:tek:wpaper:2005/6
    as

    Download full text from publisher

    File URL: http://www.tek.org.tr/dosyalar/G-YILMAZ-DE-DOLLAR.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Arturo Galindo & Leonardo Leiderman, 2005. "Living with Dollarization and the Route to Dedollarization," Research Department Publications 4397, Inter-American Development Bank, Research Department.
    2. Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
    3. Arturo Galindo & Leonardo Leiderman, 2005. "Living with Dollarization and the Route to Dedollarization," Research Department Publications 4397, Inter-American Development Bank, Research Department.
    4. Gianni De Nicolo & Patrick Honohan & Alain Ize, 2003. "Dollarization of the Banking System; Good or Bad?," IMF Working Papers 03/146, International Monetary Fund.
    5. Mishkin, Frederic S. & Savastano, Miguel A., 2001. "Monetary policy strategies for Latin America," Journal of Development Economics, Elsevier, vol. 66(2), pages 415-444, December.
    6. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2014. "Addicted to Dollars," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 1-50, May.
    7. Honohan, Patrick & Shi, Anging, 2001. "Deposit dollarization and the financial sector in emerging economies," Policy Research Working Paper Series 2748, The World Bank.
    8. Frederic S. Mishkin, 2001. "Financial Policies and the Prevention of Financial Crises in Emerging Market Countries," NBER Working Papers 8087, National Bureau of Economic Research, Inc.
    9. Gerardo Licandro & José Antonio Licandro, 2003. "Building the Dedollarization Agenda: Lessons from the Uruguayan Case," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 193-218, July-Dece.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Metin-Özcan, Kıvılcım & Us, Vuslat, 2007. "Dedollarization in Turkey after decades of dollarization: A myth or reality?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 385(1), pages 292-306.
    2. Cafer Kaplan & Erdal Ozmen & Cihan Yalcin, 2006. "The Determinants and Implications of Financial Asset Holdings of Non-Financial Firms in Turkey : An Emprical Investigation," Working Papers 0606, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. Ozlem Tasseven, 2009. "Seasonal Co-integration An Extension of the Johansen and Schaumburg Approach with an Exclusion Test," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(1), pages 39-53, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tek:wpaper:2005/6. 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: (Ercan Uygur). General contact details of provider: http://edirc.repec.org/data/tekkkea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.