Regional Inflation and Financial Dollarization

M. Brown, R. de Haas, V. Sokolov

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Abstract

Abstract: 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.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages26
Volume2013-073
Publication statusPublished - 2013

Publication series

NameCentER Discussion Paper
Volume2013-073

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Keywords

  • Financial dollarization
  • financial integration
  • regional inflation

Cite this

Brown, M., de Haas, R., & Sokolov, V. (2013). Regional Inflation and Financial Dollarization. (CentER Discussion Paper; Vol. 2013-073). Tilburg: Finance.