This paper presents a portfolio model of financial intermediation in which currency choice is determined by hedging decisions on both sides of a bank’s balance sheet. Minimum variance portfolio (MVP) allocations are found to provide a natural benchmark to estimate the scope for dollarization...

This study examines the persistence of currency substitution in Nigeria by applying the Bounds testing approach to cointegration and including a ratchet variable in the estimated Autoregressive Distributed Lag (ARDL) model. Empirical results show that factors such as exchange rate risks,...

This study investigates the relationship between exchange rate volatility and cur-rency substitution in Nigeria, using Autoregressive Distributed Lag (ARDL) model.After accounting for the presence of structural breaks, evidence from the findingsshows that domestic interest rate and expected...