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The first steps of the lender of last resort in Bulgaria. History and debates during the Great Depression

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  • Nikolay Nenovsky
  • Tsvetelina Marinova

Abstract

In recent years we have witnessed profound institutional changes in the character of central banks and in their monetary policies. These transformations are the result of a number of factors, most notably the crisis that began in 2008, as well as the large-scale processes of digitalisation of money. The place and specific mechanisms of the financial stability system, including of the lender of last resort (LOLR), are also evolving. In this context a review of the historic development of the LOLR could be particularly useful. This article aims to present the first steps of the LOLR in Bulgaria in the years of the Great Depression and the banking crises related to it. The various institutional forms of the LOLR in Bulgaria are described in sequence. The role of the Bulgarian National Bank (BNB), as the LOLR in the systemic crisis and the rescuing of Credit Bank in 1931, and the theoretical discussions among Bulgarian economists about the LOLR have been examined.

Suggested Citation

  • Nikolay Nenovsky & Tsvetelina Marinova, 2022. "The first steps of the lender of last resort in Bulgaria. History and debates during the Great Depression," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 28-53.
    • Handle: RePEc:bas:econth:y:2022:i:1:p:28-53
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    References listed on IDEAS

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    1. Goodhart, Charles A E, 1999. "Myths about the Lender of Last Resort," International Finance, Wiley Blackwell, vol. 2(3), pages 339-360, November.
    2. Kiril Danailov Kossev, 2008. "The Banking Sector and the Great Depression in Bulgaria, 1924 - 1938: Interlocking and Financial Sector Profitability," Working Papers 76, Bank of Greece.
    3. Perry Mehrling, 2014. "Why central banking should be re-imagined," BIS Papers chapters, in: Bank for International Settlements (ed.), Re-thinking the lender of last resort, volume 79, pages 108-118, Bank for International Settlements.
    4. Nenovsky, Nikolay, 2012. "Theoretical Debates in Bulgaria during the Great Depression Confronting Sombart, Marx and Keynes," OEconomia, Editions NecPlus, vol. 2012(01), pages 67-101, March.
    5. M. Berlemann & Nikolay Nenovsky, 2003. "Lending of First Versus Lending of Last Resort: The Bulgarian Financial Crisis of 1996/1997," Post-Print halshs-00260241, HAL.
    6. Paul Tucker, 2014. "The lender of last resort and modern central banking: principles and reconstruction," BIS Papers chapters, in: Bank for International Settlements (ed.), Re-thinking the lender of last resort, volume 79, pages 10-42, Bank for International Settlements.
    7. Michael Berlemann & Nikolay Nenovsky, 2004. "Lending of First versus Lending of Last Resort: The Bulgarian Financial Crisis of 1996/19971," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(2), pages 245-271, June.
    8. K. Dimitrova & Nikolay Nenovsky & G. Pavanelli, 2007. "Exchange rate control in Italy and Bulgaria in the interwar period. History and Perspectives," Post-Print halshs-00259693, HAL.
    9. Perry Mehrling, 2010. "The New Lombard Street: How the Fed Became the Dealer of Last Resort," Economics Books, Princeton University Press, edition 1, number 9298.
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    Cited by:

    1. Marinova, Tsvetelina & Nenovsky, Nikolay, 2023. "A Short History of the Great Depression in Bulgaria," MPRA Paper 118527, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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