Monetary determinants of deposit euroization in European post-transition countries

Abstract

This paper investigates the long-run and short-run relationship between deposit euroization in twelve European post-transition economies and two determinants of deposit euroization that are under the influence of monetary policy: the exchange rate and the interest rate differential. The link between deposit euroization, exchange rates and interest rate differentials is investigated using Johansen cointegration and error correction models for each country separately. The results suggest that changes in both monetary drivers have significant effects on deposit euroization and are therefore important for explaining and fighting deposit euroization. Differences between exchange rate regimes, fixed and managed vs. floating, seem to matter for deposit euroization

Is Policy Interest Effectively Used in Turkey for Against Currency Substitution: Evidence from Fourier Area

“…Literatürde Türkiye üzerine yapılan bazı çalışmalar para ikamesi ile faiz oranı arasında negatif (Civcir, 2005), enflasyon ile arasında ise pozitif yönlü ilişki olduğu yönünde bulgular mevcuttur (Domac & Oskooee, 2002). Para ikamesinin belirleyicileri konusunda yapılan çalışmalar, ulusal paranın değer kaybı /döviz kuru (Selçuk, 1994;Viseth, 2002;Yasuda, 2009;Pepic vd., 2015;Aigheyisi, 2015) ve faiz oranı (Clements & Schwartz, 1993;Tkalec, 2013;Kumamoto, 2014;Manjani, 2015), siyasi şiddet (Fielding & Shortland, 2012), siyasi belirsizliklerin (Doguwa, 2014) para ikamesini etkilediğini ortaya koymuşlardır. Para ikamesine neden olan faktörlerin yanı sıra Türkiye üzerine yapılan çalışmada para ikamesinin de döviz kuru oynaklığını artırdığına yönelik bulgular mevcuttur (Akçay, vd., 1997).…”

Determinants of financial euroisation in a small open economy: The case of Serbia

“…Chailloux et al (2010) show that foreign capital inflow has triggered easy access to FX lending in Serbia. Tkalec (2013) points out that Croatia, Hungary, Romania, Serbia, and to some extent even Turkey have mostly relied on regulatory measures but have failed to significantly decrease deposit euroisation. Velickovski (2013) points out that euroisation limits the ability of the central bank, which is oriented towards price stability, to use the nominal exchange rate to achieve other goals (for example, output stabilization).…”

Money demand during crisis – (post) transitional perspective

“…As Bahmani (2013) states, money demand estimates in the literature frequently include a scale variable measured by income, an opportunity cost variable measured by the interest rate, and the exchange rate, which accounts for currency substitution. The inclusion of the latest variable seems more than appropriate for Croatia and Serbia, since they are considered to be highly euroized countries (Tkalec, 2013). However, even the significance of traditional variables is not constant across analysed periods, leading to conclusion that the stability of money demand is questionable.…”