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The Link Between Dollarization and Its Determinants in Turkey

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Risk Management, Strategic Thinking and Leadership in the Financial Services Industry

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

Dollarization which is mostly observed in developing countries has been a widely disputed topic in the literature. It occurs due to high inflation and macroeconomic instabilities. In the previous studies the effects, causes and determinants of dollarization were analyzed using the econometric techniques such as co-integration, vector error correction model and vector autoregressive models for multivariate time series methods. We investigate the relationship between dollarization and its determinants such as interest rate differential, Istanbul stock exchange index, central bank reserve ratio, expected inflation, expected depreciation and volatility index using data between 2001 and 2014 for Turkish economy using Geweke linear feedback, causality tests in frequency domain and the wavelet comovement analysis.

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Notes

  1. 1.

    To conserve space we only report the figures for the whole period, but stil keep the interpretation of the results for the sub-samples. The remaining figures are available from the author upon request.

  2. 2.

    For details of the computation of the measure, see Geweke (1982) and Breitung and Candelon (2006).

  3. 3.

    Please see Rua (2010) for details.

  4. 4.

    Turkish people have the perception that foreign currency is a financial asset which has been well documented in the 2001 economic crisis. Although, this belief has somewhat changed during the period 2002–2007, once the depreciation of Turkish currency especially against the dolar has started, even small domestic investors prefer to switch to foreign Exchange, nomatter what the amount is.

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Authors and Affiliations

  1. Faculty of Business Administration, Department of Economics and Finance, Dogus University, Acıbadem, Kadikoy, 34722, Istanbul, Turkey

    Ozlem Tasseven

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  1. Ozlem Tasseven
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Correspondence to Ozlem Tasseven .

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Editors and Affiliations

  1. Istanbul Medipol University , Eyup, Istanbul, Turkey

    Hasan Dinçer

  2. Istanbul Medipol University , Beylikduzu, Istanbul, Turkey

    Ümit Hacioğlu

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Tasseven, O. (2017). The Link Between Dollarization and Its Determinants in Turkey. In: Dinçer, H., Hacioğlu, Ü. (eds) Risk Management, Strategic Thinking and Leadership in the Financial Services Industry . Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-47172-3_5

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