Endogenous deposit dollarization

This paper explores sources of deposit dollarization unrelated to standard moral hazard arguments. We develop a model in which banks choose the optimal currency composition of their liabilities. We argue that the equal treatment of peso and dollar claims in the event of bank default can induce banks...

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Autores principales: Levy Yeyati, Eduardo, Broda, Cristian
Formato: Documento de trabajo acceptedVersion
Lenguaje:Inglés
Publicado: Universidad Torcuato Di Tella. Escuela de Negocios. Centro de Investigaciones en Finanzas (CIF) 2018
Materias:
Tipo de cambio
Análisis financiero
Política monetaria
Dolarización de la economía
Acceso en línea:http://repositorio.utdt.edu/handle/utdt/10760
Aporte de:
Repositorio Digital Universidad Torcuato Di Tella de Universidad Torcuato Di Tella
id I57-R16320.500.13098-10760
record_format dspace
institution Universidad Torcuato Di Tella
institution_str I-57
repository_str R-163
collection Repositorio Digital Universidad Torcuato Di Tella
language Inglés
orig_language_str_mv eng
topic Tipo de cambio
Análisis financiero
Política monetaria
Dolarización de la economía
spellingShingle Tipo de cambio
Análisis financiero
Política monetaria
Dolarización de la economía
Levy Yeyati, Eduardo
Broda, Cristian
Endogenous deposit dollarization
description This paper explores sources of deposit dollarization unrelated to standard moral hazard arguments. We develop a model in which banks choose the optimal currency composition of their liabilities. We argue that the equal treatment of peso and dollar claims in the event of bank default can induce banks to attract dollar deposits above the socially desirable level. The distortion arises because dollar deposits are the only source of default risk in the model, but dollar depositors share the burden of the default with peso depositors. The incentive to dollarize is reinforced by common banking system safety nets such as deposit and bank insurance. Our findings suggest that regulators in bi-currency economies would potentially benefit by departing from the currency-blind benchmark and di.erentiating among currencies in a way that prevents undesirable currency mismatches.
format Documento de trabajo
acceptedVersion
author Levy Yeyati, Eduardo
Broda, Cristian
author_facet Levy Yeyati, Eduardo
Broda, Cristian
author_sort Levy Yeyati, Eduardo
title Endogenous deposit dollarization
title_short Endogenous deposit dollarization
title_full Endogenous deposit dollarization
title_fullStr Endogenous deposit dollarization
title_full_unstemmed Endogenous deposit dollarization
title_sort endogenous deposit dollarization
publisher Universidad Torcuato Di Tella. Escuela de Negocios. Centro de Investigaciones en Finanzas (CIF)
publishDate 2018
url http://repositorio.utdt.edu/handle/utdt/10760
work_keys_str_mv AT levyyeyatieduardo endogenousdepositdollarization
AT brodacristian endogenousdepositdollarization
bdutipo_str Repositorios
_version_ 1764820543042748418

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