DETERMINANTS OF THE DOLLARIZATION IN TURKEY: DOES IT DIFFER FOR HOUSEHOLDS AND FIRMS?

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2022-9-2

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Çatalçam, Ömer Eren

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Dollarization has once again come back on the agenda of the academic world due to soaring inflation globally. The policies used by central banks and financial authorities since the start of the coronavirus pandemic have accelerated inflation and increased dollarization. Therefore, analyzing the determinants of dollarization has become more important. In this study, the determinants of households’ deposit dollarization, firms’ deposit dollarization and loan dollarization are examined for the period from Q1-2003 to Q4-2021 via an Autoregressive Distributive Lag Model (ARDL) for Turkey. Exchange rate depreciation, inflation, USDTRY 3 months implied volatility, real deposit and lending rate, external debts to GDP, net exports to GDP and net international reserves to GDP are selected as the explanatory variables of the econometric models. These explanatory variables are selected as proxies of the currency substitution and asset substitution views. Estimation results indicate that implied volatility as a proxy of the currency substitution view positively affects firms’ deposit dollarization and loan dollarization, while inflation as a proxy of the currency substitution view positively affects households’ deposit dollarization. Additionally, under the asset substitution view, it is found that net international reserves which is a proxy for the institutional view is important for all types of dollarization.

Subject Keywords

Deposit Dollarization, Households, Firms, ARDL

URI

https://hdl.handle.net/11511/98793

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Graduate School of Social Sciences, Thesis

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Citation Formats

Ö. E. Çatalçam, “DETERMINANTS OF THE DOLLARIZATION IN TURKEY: DOES IT DIFFER FOR HOUSEHOLDS AND FIRMS?,” M.S. - Master of Science, Middle East Technical University, 2022.