Deposit Dollarization And The Financial Sector In Emerging Economies
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| Author | : Patrick Honohan |
| Publisher | : |
| Total Pages | : 27 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
Download Deposit Dollarization and the Financial Sector in Emerging Economies Book in PDF, Epub and Kindle
An increasing share of bank deposits in developing countries is denominated in foreign currency. This trend may have adverse implications for the cost and availability of credit.Analyzing new data, Honohan and Shi find that the general trend toward increased use of foreign-currency-denominated bank deposits in emerging markets has continued, despite declines in a few countries. Their analysis of the new data suggests that a sizable fraction (about half, on average) of funds switched to dollar deposit accounts are effectively exported through the banking system, thereby reducing the supply of credit. Moreover, increases in deposit dollarization are associated with increases in offshore deposits, which probably helps to explain the authors' finding that dollarization is associated with an increase in banking spreads.The authors' evidence supports, though only weakly, the conjecture that dollarization would tend to raise wholesale interest rates systematically through a peso premium. In contrast, greater dollarization is clearly associated with a higher pass-through coefficient from exchange rate change to consumer prices, potentially increasing nominal risk in the economy.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to assess the impact of financial globalization. Patrick Honohan may be contacted at [email protected].
| Author | : Patrick Honohan |
| Publisher | : |
| Total Pages | : 32 |
| Release | : 2001 |
| Genre | : Bank deposits |
| ISBN | : |
Download Deposit Dollarization and the Financial Sector in Emerging Economies Book in PDF, Epub and Kindle
An increasing share of bank deposits in developing countries is denominated in foreign currency. This trend may have adverse implications for the cost and availability of credit.
| Author | : Mr.Geoffrey J Bannister |
| Publisher | : International Monetary Fund |
| Total Pages | : 39 |
| Release | : 2018-09-11 |
| Genre | : Business & Economics |
| ISBN | : 1484373367 |
Download Dollarization and Financial Development Book in PDF, Epub and Kindle
Despite significant strides in financial development over the past decades, financial dollarization, as reflected in elevated shares of foreign currency deposits and credit in the banking system, remains common in developing economies. We study the impact of financial dollarization, differentiating across foreign currency deposits and credit on financial depth, access and efficiency for a large sample of emerging market and developing countries over the past two decades. Panel regressions estimated using system GMM show that deposit dollarization has a negative impact on financial deepening on average. This negative impact is dampened in cases with past periods of high inflation. There is also some evidence that dollarization hampers financial efficiency. The results suggest that policy efforts to reduce dollarization can spur faster and safer financial development.
| Author | : Mr.Luis Catão |
| Publisher | : International Monetary Fund |
| Total Pages | : 25 |
| Release | : 2016-04-26 |
| Genre | : Business & Economics |
| ISBN | : 1484341376 |
Download Financial De-Dollarization Book in PDF, Epub and Kindle
We re-appraise the cross-country evidence on the dollarization of financial systems in emerging market economies. Amidst striking heterogeneity of patterns across regions, we identify a broad global trend towards financial sector de-dollarization from the early 2000s to the eve of the global financial crisis of 2008–09. Since then, de-dollarization has broadly stalled or even reversed in many economies. Yet a few of them have continued to de-dollarize. This suggests that domestic factors are also important and interact with global factors. To gain insight into such an interaction, we examine the experience of Peru since the early 1990s and find that low global interest rates, low global risk-aversion, and high commodity prices have fostered de-dollarization. Domestic macro-prudential measures that raise the relative cost of domestic dollar loans and the introduction and adherence to inflation targeting have also been key.
| Author | : Isaac Marcelin |
| Publisher | : |
| Total Pages | : 34 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download Financial Sector Development and Dollarization in Emerging Economies Book in PDF, Epub and Kindle
This paper discusses important features of financial dollarization and its implications for the macro economy and financial sector deepening. Despite the need to slow down the rate of inflation and keep exchange rates under control, to achieve growth and economic development, monetary policies may permit increases in the base money to keep pace with real GDP growth. In heavily dollarized economies, during periods of sharp devaluations of the domestic currency, financial assets and liabilities shift toward foreign currency, exacerbating downward pressure on the exchange rate. When central banks face pressures to keep the exchange rate steady in nominal terms, interest rates in the domestic currency are set at levels substantially higher than those on dollar assets. In such states of the world, banks prefer to lend to the government sector at these higher rates than to the private sector. Although private firms may benefit from lower rates on dollar loans, they also face significant exchange rate or currency risk due to the currency mismatch emerging from their dollar debt while their receivables may tilt toward domestic currency denominated instruments. This weakens their balance sheet, which in turn increases the exposure of the banking sector to a variety of risks.
| Author | : A. Armas |
| Publisher | : Springer |
| Total Pages | : 349 |
| Release | : 2006-07-14 |
| Genre | : Business & Economics |
| ISBN | : 0230380255 |
Download Financial Dollarization Book in PDF, Epub and Kindle
This volume provides a rigorous and balanced perspective on the causes and implications of dollarization, and the basic policies and options to deal with it: the adaptation of the monetary and prudential frameworks, the development of local-currency substitutes, and the scope for limiting dollarization through administrative restrictions.
| Author | : Ms.Inci Ötker |
| Publisher | : International Monetary Fund |
| Total Pages | : 36 |
| Release | : 2009-06-01 |
| Genre | : Business & Economics |
| ISBN | : 1451872704 |
Download Modeling with Macro-Financial Linkages Book in PDF, Epub and Kindle
This paper develops a stylized, small, open economy macro model that incorporates an explicit and non-trivial role for financial intermediation. It illustrates how such a model could be used for policy analysis in an emerging market economy where policymakers are concerned about risks associated with rapid credit growth, financial dollarization, and foreign borrowing, while lacking traditional tools to effect monetary policy transmission, and hence could resort to more direct instruments, such as foreign exchange market intervention and regulatory and administrative measures. Calibrating the model to a stylized emerging European economy, the paper simulates real and financial sector implications of various external and policy-related shocks that could be used as input for monetary policy making.
| Author | : Alina C. Luca |
| Publisher | : |
| Total Pages | : 352 |
| Release | : 2003 |
| Genre | : Bank deposits |
| ISBN | : |
Download Financial Dollarization in Emerging Market and Transition Economies Book in PDF, Epub and Kindle
| Author | : Emre Ozsoz |
| Publisher | : Walter de Gruyter GmbH & Co KG |
| Total Pages | : 140 |
| Release | : 2016-05-24 |
| Genre | : Business & Economics |
| ISBN | : 3110437023 |
Download Understanding Dollarization Book in PDF, Epub and Kindle
A very commonly observed phenomenon in developing and emerging market economies is the use of another country’s currency (whether the US dollar or another currency) in lieu or in addition to the local currency. The most common type of this financial phenomenon is partial (de facto) dollarization where foreign currencies are used side by side with local currency for saving and borrowing purposes in addition to serving as medium of exchange. Governments in these countries have been encouraging dollarization for years by allowing their citizens to save and borrow from local banks in foreign currency. Yet the existence of multiple currencies on banks' balance sheets on both the asset and liability side poses risks to the health and stability of the banking system. This book evaluates the practical aspects of partial dollarization in countries such as Turkey, South Korea, Peru, and Cambodia among others. Starting with the origins of the phenomenon, the impact on banking systems and financial depth of the credit markets are discussed along with risks to the banking systems. Challenges faced by Central Banks and banking regulators are evaluated using recent country studies.
| Author | : Masahiro Kawai |
| Publisher | : Brookings Institution Press |
| Total Pages | : 441 |
| Release | : 2011-05-01 |
| Genre | : Business & Economics |
| ISBN | : 0815704909 |
Download Financial Market Regulation and Reforms in Emerging Markets Book in PDF, Epub and Kindle
A Brookings Institution Press and Asian Development Bank Institute publication The rapid spread and far-reaching impact of the global financial crisis have highlighted the need for strengthening financial systems in advanced economies and emerging markets. Emerging markets face particular challenges in developing their nascent financial systems and making them resilient to domestic and external shocks. Financial reforms are critical to these economies as they pursue programs of high and sustainable growth. In this timely volume Masahiro Kawai, Eswar Prasad, and their contributors offer a systematic overview of recent developments in—and the latest thinking about—regulatory frameworks in both advanced countries and emerging markets. Their analyses and observations clearly point out the challenges to improving regulation, efficiency of markets, and access to the fi nancial system. Policymakers and financial managers in emerging markets are struggling to learn from the crisis and will need to grapple with some key questions as they restructure and reform their financial markets: • What lessons does the global financial crisis of 2007–09 offer for the establishment of efficient and flexible regulatory structures? • How can policymakers develop broader financial markets while managing the associated risks? • How—or should—they make the formal financial system more accessible to more people? • How might they best contend with multinational financial institutions? This book is an important step in getting a better grasp of these issues and making progress toward solutions that strike a balance between promoting financial market development and efficiency on the one hand, and ensuring financial stability on the other.
