Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264763 
Year of Publication: 
2011
Series/Report no.: 
Working Paper No. 171
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
Foreign currency loans represent an important feature of recent financial developments in CEECs. This might pose a serious challenge for macroeconomic stability. Against this background, the authors study the determinants of foreign currency loans of households, using data on the behavior of households in nine CEECs. Their results reveal that foreign currency loans are driven by households' lack of trust in the stability of the local currency and in domestic financial institutions. Moreover, special factors including remittances and expectations of euro adoption play an important role in selected regions. The financial crisis reduced foreign currency borrowing, but there is some indication this effect might be only temporary.
Subjects: 
Foreign currency loans
dollarization
euroization
monetary credibility
trust
CEEC
JEL: 
G18
G21
C25
Document Type: 
Working Paper

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