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Regional Inflation and Financial Dollarization

  • Brown, Martin

    ()

  • De Haas, Ralph

    ()

  • Sokolov, Vladimir

    ()

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://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1327.pdf
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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
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:usg:sfwpfi:2013:27
Contact details of provider: Phone: +41 71 243 40 11
Fax: +41 71 243 40 40
Web page: http://www.unisg.ch/de/universitaet/schools/finance

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