The Impact of Dollarization on Consumption and Savings Behavior in Dili Timor-Leste (Case Study: Permanent Civil Servants)

Abstract

Dollarization is adopting the U.S. dollar as the currency of choice in a foreign country. A small nominal value of the dollar pushed the price in the market becomes more expensive. Coupled with the community of Dili, Timor-Leste that the behavior of consumption is very high because it always gives more priority to their culture. Saving behavior of Timorese people affect by three factors: the low price (using U.S dollar), income and culture. Therefore, this research aims to identified the effect of dollarization on consumption behavior and saving behavior of permanent civil servants in Dili, Timor-Leste.  We use 315 samples in our research and the data collection through questionnaires. SMART-PLS 3.0 was used to test hypothesis. The result showed that dollarization has the positive and significant effect on the consumption behavior of permanent civil servants in Dili, Timor-Leste. Therefore, dollarization has positive and significant effect on saving behavior of permanent civil servants in Dili, Timor-Leste.