Assessing a Currency Substitution Persistency in the Western Balkan Region
Assessing a Currency Substitution Persistency in the Western Balkan Region

Summary/Abstract: The study aims to examine the euroization phenomenon in seven Western Balkan countries (Albania,Bosnia and Herzegovina, Bulgaria, Croatia, Romania, Serbia and Macedonia) between 2000 and 2015and a number of –specific challenges faced by the region. More precisely, the paper analyzes theimpact of the latest global financial crisis on the extent of currency substitution persistency byexploring the trends before, in wake of the financial crisis, and after the financial crisis. The studyemployed several indicators as a proxy variable for measuring of the overall level of currencysubstitution or euroization and cross country analysis in selected countries (liability euroization,credit euroization and deposit euroization and asset substitution- overall euroization index). Finally,the study found that deposit euroisation, credit euroization, and liabilities euroization in sevenWestern Balkan countries is still high with relatively high degree of heterogeneity. In some countriesof the Western Balkan region the process of euroisation was further intensified in spite of theconsequences of the latest global financial crises, while in the other ones the crisis years weremarked by the trend of de-euroisation. In overall, this study does not find any significant evidence onsignificantly increases or decreases in currency substitution at the region sub-samples. Finally,Student t-test results indicate that there is no significant difference in means of before, in wake andafter the financial crises at level of Western Balkan region.

• Details
• Contents