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Regional inflation and financial dollarisation

Author

Listed:
  • Martin Brown

    (Swiss Institute of Banking and Finance, University of St.Gallen)

  • Ralph De Haas

    (EBRD)

  • Vladimir Sokolov

    (Higher School of Economics)

Abstract

In this paper, 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 dollarisation. Our results show that regions with higher inflation experience an increase in the dollarisation of household deposits and a decrease in the dollarisation of (long-term) household credit. The negative impact of inflation on credit dollarisation is weaker in regions with less integrated banking markets, suggesting that the asset-liability management of banks constrains the currency-portfolio choices of households.

Suggested Citation

  • Martin Brown & Ralph De Haas & Vladimir Sokolov, 2013. "Regional inflation and financial dollarisation," Working Papers 163, European Bank for Reconstruction and Development, Office of the Chief Economist.
    • Handle: RePEc:ebd:wpaper:163
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    References listed on IDEAS

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    1. repec:cbh:journl:v:14:y:2015:i:3:p:60-87 is not listed on IDEAS
    2. Pál Péter Kolozsi & Ádám Banai & Balázs Vonnák, 2015. "Phasing out household foreign currency loans: schedule and framework," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(3), pages 60-87.
    3. Davydova, Yulia & Sokolov, Vladimir, 2014. "The real effects of financial constraints: Evidence from a debt subsidization program targeted at strategic firms," Journal of Empirical Finance, Elsevier, vol. 29(C), pages 247-265.
    4. Айвазян С.А. & Березняцкий А.Н. & Бродский Б.Е., 2016. "Региональные Модели Ценовых Индексов," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 52(4), pages 24-46, октябрь.
    5. Pál Péter Kolozsi & Csaba Lentner, 2020. "Consolidation and Legacy of Foreign Currency Household Lending in Central and Eastern Europe: The Case of Hungary," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 14(3), September.

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    More about this item

    Keywords

    Financial dollarisation; financial integration; regional inflation;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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