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Not the usual suspects: Critical indicators in a dollarized country's Financial Stress Index

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  • Mansour Ishrakieh, Layal
  • Dagher, Leila
  • El Hariri, Sadika

Abstract

In this paper we investigate the importance of the dollarization rate in heavily dollarized economies as one of the indicators in a Financial Stress Index. We use data on Lebanon, a middle-income developing country, considered to be one of the highest dollarized countries in the world to construct the first Financial Stress Index for Lebanon. Our findings indicate that the dollarization rate is the most important indicator for the FSI. This should be of relevance to many dollarized countries such as Bolivia, Peru, Uruguay, and others. Remarkably, none of the existing FSIs for dollarized countries has included the dollarization rate.

Suggested Citation

  • Mansour Ishrakieh, Layal & Dagher, Leila & El Hariri, Sadika, 2018. "Not the usual suspects: Critical indicators in a dollarized country's Financial Stress Index," MPRA Paper 116086, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116086
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    Cited by:

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    3. Chen, Ning & Li, Shaofang & Lu, Shuai, 2023. "The extreme risk connectedness of the global financial system: G7 and BRICS evidence," Journal of Multinational Financial Management, Elsevier, vol. 69(C).
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    6. Layal Mansour-Ichrakieh, 2021. "The Impact of Israeli and Saudi Arabian Geopolitical Risks on the Lebanese Financial Market," JRFM, MDPI, vol. 14(3), pages 1-24, February.

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    More about this item

    Keywords

    Financial Stress Index; Financial Crisis; Dollarization Rate;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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