Financial sanctions and the share of US dollar in global reserve currencies: evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model

Aliyu R. Sanusi; Suleiman O. Mamman; Jamilu Iliyasu; Attahir Abubakar

doi:10.1080/13504851.2023.2261617

Financial sanctions and the share of US dollar in global reserve currencies: evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model

Aliyu R. Sanusi, Suleiman O. Mamman, Jamilu Iliyasu, Attahir Abubakar

School of Business and Creative Industries

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Abstract

The decline in the dollar’s share in global reserve currencies has generated debate on the effect of the United States’ financial sanctions. This study examines the effect of US financial sanctions on the dollar’s share in global reserve currencies by employing the Least Absolute Shrinkage and Selector Operator (LASSO) model. The estimates suggest that the imposition of financial sanctions by the US reduces the dollar’s share in global reserve currencies. This implies that although the US dollar remains the foremost global reserve currency, the imposition of financial sanctions may weaken its dominance.

Original language	English
Pages (from-to)	1-4
Number of pages	4
Journal	Applied Economics Letters
DOIs	https://doi.org/10.1080/13504851.2023.2261617
Publication status	E-pub ahead of print - 22 Nov 2023

Keywords

US dollar
financial sanctions
central banks
global reserve currency

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10.1080/13504851.2023.2261617Licence: CC BY 4.0

2023 09 04 Sanusi et al sanctions finalFinal published version, 664 KBLicence: CC BY 4.0

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title = "Financial sanctions and the share of US dollar in global reserve currencies: evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model",

abstract = "The decline in the dollar{\textquoteright}s share in global reserve currencies has generated debate on the effect of the United States{\textquoteright} financial sanctions. This study examines the effect of US financial sanctions on the dollar{\textquoteright}s share in global reserve currencies by employing the Least Absolute Shrinkage and Selector Operator (LASSO) model. The estimates suggest that the imposition of financial sanctions by the US reduces the dollar{\textquoteright}s share in global reserve currencies. This implies that although the US dollar remains the foremost global reserve currency, the imposition of financial sanctions may weaken its dominance.",

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AU - Iliyasu, Jamilu

AU - Abubakar, Attahir

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AB - The decline in the dollar’s share in global reserve currencies has generated debate on the effect of the United States’ financial sanctions. This study examines the effect of US financial sanctions on the dollar’s share in global reserve currencies by employing the Least Absolute Shrinkage and Selector Operator (LASSO) model. The estimates suggest that the imposition of financial sanctions by the US reduces the dollar’s share in global reserve currencies. This implies that although the US dollar remains the foremost global reserve currency, the imposition of financial sanctions may weaken its dominance.

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Financial sanctions and the share of US dollar in global reserve currencies: evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model

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