Empirical Investigation of the Dolarization Trend in Turkey

Abstract

Dollarization means that the country's currency is used less in the economy for various reasons or that foreign currency is heavily preferred in a country. This situation also shows that the functions of money in the country as saving, carrying value, being a means of exchange and investment are realized with foreign currency, which is a foreign currency. The phenomenon of dollarization, which is also defined as currency substitution, can be applied as monetary policy in many countries today. In this study, it is aimed to investigate the dollarization effect of the change in the exchange rate on real person foreign deposits in Turkey. The empirical analysis covers the period 2012:M12–2023:M03. In the study, in which the exchange rate, foreign currency deposit and consumer confidence index variables were used, the ADF unit root test was used to measure the stationarity level of the variables, the ARDL bounds test for the cointegration relationship, and the Hacker-Hatemi-J causality test for the causality situation. Finally, CCR, OLS and FMOLS tests were applied to estimate the coefficients of the variables. In the light of the findings, the increases in the exchange rate increase the foreign currency deposits; It is understood that the increase in the consumer confidence index has a decreasing effect on foreign currency deposits.