Abstract
From the beginning of the 1970s until the last global financial and economic crisis in 2008-2009, neo-liberal ideas guided economic policy development. It is worth noting that the Central and Eastern European countries transformed their economies from centrally planned to а market type at the peak of the liberal policies. Bulgaria offers a particularly interesting example because the country encountered a very difficult transition from one extreme of an economic system organization to another. The paper considers the reforms in the Bulgarian banking sector during the transition period from a centrally planned to a market type economy (from 1989 onward) through the implementation of neo-liberal policies. The development of the banking sector and its transformation is analyzed throughout the two main periods: before and after the transition. The latter is divided into two sub-periods (phases) beginning with the early 1990s, followed by the financial and bank crisis in the country, the introduction of a currency board regime in 1997, and stabilization, and ending with the global crisis in 2008-2009. This article summarizes that during the transition period, a modern banking system was established to accumulate profit rather than to promote economic growth. Following a chronological order, the negative effects of the liberalization of the Bulgarian banking sector are specified: the exportation of ownership (and control) upon banking system assets, unfair asset redistribution, the emergence of the local oligarchy, the weak protection of the taxpayers and others.
Highlights
Neo-liberal ideas emerged a few decades ago
Countries worldwide started using pure paper money without any correlation to gold or other measures of value; that change had significant implications upon financial and economic life. These events influenced the rise of neo-liberal ideas in the world, and most naturally, the same ideas have been selected as the building base in the process of transforming the countries with central planning to a market type economy
The article attempts to consider the application of neo-liberal policies in the case of the Bulgarian banking system reforms during the transition period from a centrally planned to a market type economy
Summary
Neo-liberal ideas emerged a few decades ago. In the early 1970s, an unprecedented boom took place in economic thought. It was in 1989 that the idea of the central planning of economic activity totally collapsed in the socialist system in CEE, including Bulgaria These countries undertook a transformation that was strongly influenced by the neo-liberal approach. Countries worldwide started using pure paper money without any correlation to gold or other measures of value; that change had significant implications upon financial and economic life These events influenced the rise of neo-liberal ideas in the world, and most naturally, the same ideas have been selected as the building base in the process of transforming the countries with central planning to a market type economy. The article attempts to consider the application of neo-liberal policies in the case of the Bulgarian banking system reforms during the transition period from a centrally planned to a market type economy. Following the reform of the banking sector up to the time of the world financial and economic crisis in 2008-2009, the negative effects of the liberalization of Bulgarian banking system are specified
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