On the response to the financial crisis of 1914: The Bank of England's discount policy

Mariarosaria Agostino, Lucia Errico, Sandro Rondinella and Francesco Trivieri

Research in Economics, 2022, vol. 76, issue 4, 290-307

Abstract: This work investigates the Bank of England's policy response to the London Financial Crisis of 1914, triggered by the outbreak of the Great War. By using daily data on discount operations drawn from the Bank of England's historical archive, we empirically test whether the Central Bank played the role of lender of last resort or it restricted credit. Our results suggest that, during 1914, the Bank of England did not change its policy in terms of bills’ discounting. Even though the discounter identity might have been a determinant of Bank's lending decisions (as in Flandreau and Ugolini, 2011 and 2013; Anson et al., 2019a), our evidence suggests that, throughout 1914, the Bank of England operated as a lender of last resort according to the Bagehot rules.

Keywords: Financial crisis; Bank of England; Great war; Bagehot rules (search for similar items in EconPapers)
JEL-codes: E58 N20 N24 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:76:y:2022:i:4:p:290-307

DOI: 10.1016/j.rie.2022.09.001

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