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Banks-Firms Nexus under the Currency Board: Empirical Evidence from Bulgaria

Author

Listed:
  • Nikolay Nenovsky

    (LEO - Laboratoire d'Économie d'Orleans [UMR6586] - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique)

  • E. Peev
  • T. Yalamov

Abstract

This study analyses bank lending in the larger context of bank-firm relations within the Bulgarian specificity of currency board. It focuses on the ???intersection??? of credit supply and demand on the side of banks and firms simultaneously. We suggest both traditional and new hypotheses corresponding to the specific conditions of the Bulgarian ownership change, transitional corruption and other institutional and political factors. The model is based on a survey on Bulgarian banks and a unique database on firms. The study found that the dynamics and structure of credit is affected mainly by the features of the institutional environment, whereas the ???resource??? and traditional factors became secondary. During the period 1998 ??? 2001, there is separation of the banking sector activity from the activity of the real sector in Bulgaria. In the new conditions of currency board, the dual sector of enterprises and the specific institutional environment continue their existence. Despite its disciplining effect the currency board by itself is not sufficiently effective to overcome the remaining ???institutional obstacles, associated mainly with the inefficiency of the judicial system, corruption, state capture, uncertain property rights, etc.
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Suggested Citation

  • Nikolay Nenovsky & E. Peev & T. Yalamov, 2003. "Banks-Firms Nexus under the Currency Board: Empirical Evidence from Bulgaria," Post-Print halshs-00259830, HAL.
    • Handle: RePEc:hal:journl:halshs-00259830
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    as
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    Cited by:

    1. Größl, Ingrid, 2005. "The interplay of legal and social norms and the failure of the bank credit market in Bulgaria," ZÖSS-Discussion Papers 04, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    2. Cristian-Florin Dănănău, 2015. "A Disequilibrium Model For Lei-Denominated Non-Governmental Credit In Romania," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 7, pages 207-214, April.
    3. Raphael Solomon, 2005. "Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion," Staff Working Papers 05-23, Bank of Canada.
    4. Jorge MEIRA COSTA, 2018. "Participatory Budgeting (Portugal) as a marshalling legal process to formally and democratically defining European Monetary System and Policy," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 279-295, June.

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    More about this item

    Keywords

    Banks-Firms; Nexus; Currency; Board; Empirical; Evidence; Bulgaria;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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