World Bank2014-07-172014-07-172009-07https://hdl.handle.net/10986/18894This report describes developments in the banking sector. The banking sector has remained stable throughout the ongoing financial crisis, although profitability is declining. Indicators suggest that banks are generally sound. It next describes the state of funding of bank operations, including wholesale bank funding. In response to financial stress, The Bulgarian National Bank's (BNB) actions have helped to ensure financial stability in the banking sector. In order to boost confidence, deposit insurance has increased. External funding dynamics are generally good. Foreign currency mismatches are substantial, and the corporate sector has high direct foreign currency exposure, mostly in euros. Short-term external debt (deposits and borrowings) of banks almost doubled within a year in 2008, and account for close to 80 percent of banks' external debt. Regarding recent trends in credit to the enterprise sector, going forward, demand for banking credit, and especially investment finance, will fall, in line with the economic downturn. In equity market developments, Bulgaria's stock market plunged, with adverse consequences for pension funds. Global deleveraging by foreign institutional investors led to a withdrawal of their holdings from the Sofia stock exchange, leading to a collapse of stock market prices. The report concludes with several policy recommendations.en-USCC BY 3.0 IGOACCOUNTINGBALANCE SHEETBANK CREDITBANK DEPOSITSBANK OPERATIONSBANKING SECTORBANKING SYSTEMBANKRUPTCIESBANKRUPTCYBANKRUPTCY PROCEDURESBANKRUPTCY RESOLUTIONBENEFICIARIESBONDBOND MARKETBUSINESS INVESTMENTCAPITAL MARKETSCAPITAL NEEDSCAPITAL RATIOCAPITAL REQUIREMENTCDSCENTRAL BANKCONSUMER LOANSCONTAGIONCONTINGENCY PLANSCORPORATE BORROWINGCORPORATE LAWCORPORATE RESTRUCTURINGCORPORATE SUSTAINABILITYCOURT SYSTEMCREDIT AVAILABILITYCREDIT DEFAULTCREDIT DEFAULT SWAPSCREDIT GROWTHCREDIT LINESCREDIT QUALITYCREDIT RISKCREDIT RISKSCREDIT SOURCECREDITORCREDITOR RIGHTSCREDITORSCURRENCY BOARDCURRENCY BOARD ARRANGEMENTCURRENCY MISMATCHESCURRENCY RISKSCURRENT ACCOUNT DEFICITDEBT LEVELDEBTSDEMAND FOR CREDITDEPOSITDEPOSIT INSURANCEDEPOSITORDEPOSITORSDEVELOPMENT BANKDOMESTIC BANKINGDOMESTIC INVESTORSECONOMIC DOWNTURNEMPLOYMENTENTERPRISE CREDITEQUITY INVESTMENTSEQUITY MARKETEQUITY MARKET DEVELOPMENTSEXISTING DEBTSEXPOSURESEXTERNAL DEBTEXTERNAL FUNDINGFINANCIAL AUTHORITIESFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL SECTORFINANCIAL STABILITYFINANCIAL STRESSESFINANCIAL SYSTEMFISCAL POLICIESFIXED INVESTMENTFLOW OF CREDITFOREIGN BANKFOREIGN BANKSFOREIGN CURRENCYFOREIGN CURRENCY EXPOSUREFOREIGN INSTITUTIONAL INVESTORSFOREIGN INVESTORSFORMAL BANKRUPTCYFORMAL BANKRUPTCY PROCEDURESGOVERNMENT BUDGETSGOVERNMENT POLICIESHOLDINGSHOME COUNTRYINSOLVENCYINSTITUTIONAL INVESTORSINSURANCE INDUSTRIESINTEREST RATESINVESTMENT FINANCEINVESTMENT OPPORTUNITIESINVESTMENT REGULATIONSINVESTMENTS IN EQUITYJUDICIARYJUDICIARY SYSTEMLIQUIDITYLIQUIDITY RISKLOANLOAN ORIGINATIONSLOCAL CURRENCYLOCAL GOVERNMENTMANUFACTURING INDUSTRIESMARKET BORROWINGMARKET RISKMARKET RISKSMATURITIESMATURITYMORTGAGESNATIONAL BANKNET ASSETSNON-PERFORMING LOANSOUTPUTPENSIONPENSION FUNDPENSION FUNDSPENSIONSPORTFOLIOPORTFOLIO QUALITYPRIVATE PENSIONPRIVATE SECTOR CREDITPROFITABILITYRAPID GROWTHRATE OF RETURNREAL ESTATEREALLOCATION OF RESOURCESREGULATORY AUTHORITIESREGULATORY FRAMEWORKRESERVERESERVE REQUIREMENTSRESERVESRETIREMENTRETURN ON ASSETSRETURNSRISK MANAGEMENTSECURITIESSECURITIES MARKETSSHAREHOLDERSSHORT-TERM DEBTSHORT-TERM EXTERNAL DEBTSOLVENCYSTOCK EXCHANGESTOCK MARKETSTOCK MARKET PRICESSTOCKSSUBSIDIARIESTOTAL DEBTTRANSPARENCYWHOLESALE BANKWITHDRAWALWORKING CAPITALWORKOUTS10.1596/18894