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Dollarization and External Sustainability of Turkey

Author

Listed:
  • Amira Karimova

    (Fatih University, Turkey)

  • Ahmet Caliskan

    (Fatih University, Turkey)

  • Jamshid Karimov

    (Nigerian Turkish Nile University, Nigeria)

Abstract

In this paper, we attempt to explain that expanding current account deficit of Turkey can be a highlighting signal of its dependency on foreign capital inflows. When private non-financial firms borrow in foreign currency, they face currency mismatch in their balance sheets. Statistical analyses of aggregated balance sheet data of non-financial sector revealed that the negative gap between firms’ dollarized assets and liabilities has been increasing considerably in Turkey. This creates financial exposure by private non-financial sector. Given a high level of liability dollarization by firms in Turkish economy, it is exposed dramatically to the changes in external and domestic conditions.

Suggested Citation

  • Amira Karimova & Ahmet Caliskan & Jamshid Karimov, 2015. "Dollarization and External Sustainability of Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 3(2), pages 1-11.
    • Handle: RePEc:ejn:ejefjr:v:3:y:2015:i:2:p:1-11
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    References listed on IDEAS

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