An empirical study on the hysteresis of currency substitution in Cambodia

► This paper examines whether the currency substitution phenomenon in Cambodia is in a hysteresis state. ► There exists a stable, long-run relationship among the variables in consideration. ► The currency substitution ratio increases when people expect a higher rate of depreciation in the exchange rate. ► There is an evidence supporting the existence of a network externality, thereby implying the hysteresis of the currency substitution phenomenon in Cambodia.