Current Issue
Volume
31
year
2025
Issue
2

Archive

AUTHOR'S GUIDELINES

ABSTRACT GUIDELINES

SUBMIT AN ARTICLE

SCIENTFIC AND RESEARCH PROFILE

PUBLICATION ETHICS

PEER REVIEW POLICY

ABSTRACTING AND INDEXING

EDITORIAL BOARD

INTERNATIONAL EDITORIAL BOARD

PUBLISHER


Economic Alternatives articles are published open access under a Creative Commons CC BY 4.0 user licence

ADDRESS OF THE EDITORIAL OFFICE

ISSN (print): 1312-7462
ISSN (online): 2367-9409
4 issues per year


The conceptions of the authors express their personal opinion and do not engage the editors of the journal.

The Editorial Board is committed to open science and free access to scientific publications.

No Article Processing Charges apply. The Publisher allows for immediate free access to the work and permits any user to read, download, copy, distribute, print, search, or link to the full texts of articles, crawl them for indexing, pass them as data to software, or use them for any other lawful purpose. 

Every manuscript received will be checked for plagiarism.

Typeset by:

UNWE Publishing Complex

Printed by:

UNWE Publishing Complex

The Effects of Euroization on Monetary and Financial Stability: Empirical Evidence from Five Countries Economic Alternatives
year
2025
Issue
2

The Effects of Euroization on Monetary and Financial Stability: Empirical Evidence from Five Countries

Abstract

This paper explores the effects of excessive financial Euroization on monetary and financial stability by using deviation from interest rate parity (dIRP) as a proxy measure of financial and monetary stability, building on the interest rate parity puzzle theory. We focus on five Central and Eastern European (CEE) EU member countries (Poland, Hungary, the Czech Republic, Romania, and Croatia) from January 2002 to December 2019. The impact of euroization parameters on dIRP is empirically tested by employing the ARDL cointegration model and the Granger causality test. Interest rate differentials and inflation were employed as additional explanatory and control variables. Results show that loan euroization and interest rate differentials greatly impact dIRP in all countries except the Czech Republic, where deposit euroization and inflation have a more significant impact. Furthermore, the causality analysis has shown that there is also a vicious circle where dIRP causes Euroization in the short run. At the same time, greater Euroization, in turn, exacerbates dIRP in the long run. This confirms that Euroization is relevant in explaining the interest rate puzzle, impacts greater dIRP among financial markets, and strives to harmonize interest rates with the euro area to maintain financial and monetary stability.

Keywords

monetary policy, CEE Countries, Euroization, Interest Rate Parity, Financial Stability.
Download EA.2025.2.01.pdf