IDEAS home Printed from
   My bibliography  Save this paper

New paradigms and old promises: central banks and the market for sovereign debt in the interwar period


  • Flores Zendejas, Juan
  • Lopez Soto, David
  • Sanchez Amador, David


This paper analyses the motives behind the establishment of central banks during the interwar period. We argue that most governments with difficulties in accessing financial markets established central banks, as this was a general recommendation provided by contemporary money doctors. However, even if central banks served to facilitate the issue of foreign loans on the New York financial market, we find that governments with central banks did not obtain more favorable terms for those loans. Our analysis further demonstrates that investors concentrated on macroeconomic achievements such as inflation and monetary stability, and whether a lender-of-last resort facility existed, regardless of whether or not this was pursued by a central bank.

Suggested Citation

  • Flores Zendejas, Juan & Lopez Soto, David & Sanchez Amador, David, 2020. "New paradigms and old promises: central banks and the market for sovereign debt in the interwar period," Working Papers unige:129346, University of Geneva, Paul Bairoch Institute of Economic History.
  • Handle: RePEc:gnv:wpaper:unige:129346

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. Juan H. Flores Zendejas & Yann Decorzant, 2016. "Going multilateral? Financial markets' access and the League of Nations loans, 1923–8," Economic History Review, Economic History Society, vol. 69(2), pages 653-678, May.
    3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    4. Charles Goodhart, 1988. "The Evolution of Central Banks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570734, September.
    5. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, December.
    6. Stefano Ugolini, 2017. "The Evolution of Central Banking: Theory and History," Palgrave Studies in Economic History, Palgrave Macmillan, number 978-1-137-48525-0, December.
    7. Marcelo de Paiva Abreu & Pedro Carvalho Loureiro de Souza, 2011. ""Palatable Foreign Control": British money doctors and central banking in South America, 1924-1935," Textos para discussão 597, Department of Economics PUC-Rio (Brazil).
    Full references (including those not matched with items on IDEAS)

    More about this item


    Money doctors; Central banking; Great depression; Sovereign debt;

    JEL classification:

    • N00 - Economic History - - General - - - General
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gnv:wpaper:unige:129346. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Blaise Claivaz). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.