Is there an Asset Substitution Motive in Ukrainian Dollarization?

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Piontkivsky, R.
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The phenomenon of dollarization — residents in a given country holding a proportion of their assets in the form of foreign currency and foreign currency denominated assets — has become widespread in transition economies. This paper tests two hypotheses on Ukrainian data. The first is that dollarization in Ukraine is driven by portfolio balance considerations, i.e. by differences in real rates of returns. The second is the existence of hysteresis in dollarization pattern. Despite the data limitation, the paper founds that the difference in rates of return does play a significant role in explaining dollarization, leading to a conclusion, that large part of dollarization represents asset substitution. However, unlike what have happened in Latin American, there is no evidence so far of downward rigidity in dollarization in Ukraine.
the phenomenon, dollarization, denominated assets
Piontkivsky R. V. Is there an Asset Substitution Motive in Ukrainian Dollarization?/ R. V. Piontkivsky // Наукові записки НаУКМА. - 2000. - Т. 18 : Економічні науки. - С. 57-64.