Technical Report Regional Inflation and Financial Dollarization

Brown, Martin  ,  Haas, Ralph De  ,  Sokolov, Vladimir

2015-06 , Institute of Economic Research, Hitotsubashi University
We exploit variation in consumer price inflation across 71 Russian regions to examine the relationship between the perceived stability of the domestic currency and financial dollarization. Our results show that regions with higher inflation experience an increase in deposit dollarization and a decrease in the dollarization of loans to households and firms in non-tradable sectors. The negative impact of inflation on credit dollarization is weaker in regions with less integrated banking markets. This suggests that the asset-liability management of banks constrains the currency-portfolio choices of both households and firms without a natural currency hedge.
基盤研究(S) = Grants-in-Aid for Scientific Research (S)

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