FINANCIAL DOLLARIZATION IN EMERGING MARKETS: AN INSURANCE ARRANGEMENT

• 成果类型: Article
• 署名作者: Dalgic, Husnu C.
• 署名单位: University of Mannheim; University of Mannheim
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12686
• 发表日期: 2024
• 页码: 1189-1219
• 关键词: monetary-policy; Currency risk; dollar debt; TRADE; CONTRACTS

摘要

Households in emerging markets hold significant amounts of dollar deposits whereas firms have significant amount of dollar debt. Motivated by perceived dangers, policymakers consider regulations to limit dollarization. I draw attention to an important benefit of dollarization: it serves as an insurance arrangement in which firms provide income insurance. Emerging market exchange rates tend to depreciate in recessions so that households prefer holding deposits denominated in dollars. They effectively starve local financial markets of local currency; raising local interest rates over USD rates and causing entrepreneurs to borrow in dollars. This premium is the price paid by households for insurance.