Publication:
Systemic Risk, Dollarization, and Interest Rates in Emerging Markets

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creativeworkseries.issn1564-698X
dc.contributor.authorBacha, Edmar L.
dc.contributor.authorHolland, Márcio
dc.contributor.authorGonçalves, Fernando M.
dc.date.accessioned2012-03-30T07:12:37Z
dc.date.available2012-03-30T07:12:37Z
dc.date.issued2009-02-28
dc.description.abstractThis study investigates the impact of systemic risks and financial dollarization on real interest rates in emerging economies. Higher systemic risks induce both higher real interest rates and increased dollarization. Using appropriate instruments for the dollarization ratio, the study overcomes the simultaneous equation problem and correctly estimates a negative coefficient for the dollarization ratio in the interest rate equation. It confirms the theoretical prediction that a strategy of "dedollarizing" the economy will raise the equilibrium domestic real interest rate if the strategy fails to address fundamental macroeconomic risks. Even so, it also finds that this effect is small, after controlling for the risks of dilution and default. The results bring to light the systemic-risk reasons for high interest rates in emerging economies—and contribute to evaluating the difficulties of dedollarization policies.en
dc.identifier.citationWorld Bank Economic Review
dc.identifier.doi10.1596/4496
dc.identifier.issn1564-698X
dc.identifier.urihttps://hdl.handle.net/10986/4496
dc.publisherWorld Bank
dc.relation.ispartofseriesWorld Bank Economic Review
dc.rightsCC BY-NC-ND 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.subjectasset management
dc.subjectbonds
dc.subjectcontract enforcement
dc.subjectcurrency
dc.subjectcurrency mismatches
dc.subjectdefault risk
dc.subjectemerging economies
dc.subjectemerging markets
dc.subjectexchange rate
dc.subjectinterest rate
dc.subjectinterest rates
dc.subjectinternational bank
dc.subjectinternational market
dc.subjectissuance
dc.subjectlevy
dc.subjectmacroeconomic risks
dc.subjectmarket failures
dc.subjectreal interest
dc.subjectreal interest rate
dc.subjectreal interest rates
dc.titleSystemic Risk, Dollarization, and Interest Rates in Emerging Marketsen
dc.title.alternativeA Panel-Based Approachen
dc.typeJournal Articleen
dc.typeArticle de journalfr
dc.typeArtículo de revistaes
dspace.entity.typePublication
okr.date.doiregistration2025-05-06T11:30:04.323163Z
okr.doctypeJournal Article
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.identifier.report1
okr.language.supporteden
okr.pagenumber101
okr.pagenumber117
okr.pdfurlwber_23_1_101.pdfen
okr.peerreviewAcademic Peer Review
okr.region.administrativeEurope and Central Asia
okr.region.administrativeLatin America & Caribbean
okr.region.countryBrazil
okr.region.countryChina
okr.topicMacroeconomics and Economic Growth
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicPrivate Sector Development::Emerging Markets
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicEconomic Theory and Research
okr.topicBanks and Banking Reform
okr.volume23
relation.isJournalIssueOfPublication765afeee-ef91-4a3a-8298-e46e98d8ca0a
relation.isJournalIssueOfPublication.latestForDiscovery765afeee-ef91-4a3a-8298-e46e98d8ca0a
relation.isJournalOfPublicationc41eae2f-cf94-449d-86b7-f062aebe893f
relation.isJournalVolumeOfPublication2a48d5d8-d550-47d9-ae0e-29ef4f0212f2
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