Abstract:
This paper aims to evaluate the degree of dollarization in the Maldivian
economy. Utilizing three measures identifi ed from the literature on the
subject, dollarization ratios have been constructed to assess the degrees
of deposit and credit dollarization, prevalent in the local economy.
To this end, data on the currency composition of deposits held at and
credit extended by the commercial banks in the Maldives from 1990 to
November 2015 (obtained from the Maldives Monetary Authority), have
been scrutinised to study dollarization trends over the 25 year period.
Further, the paper will explore the causes and reasons for the high
degree of dollarization, and posit explanations for the identifi ed trends.
