Lender of Last Resort: A Review of the Literature

The concept of lender of last resort (LOLR) originated at the beginning of the nine teenth century when Henry Thornton (1802) spelt out the basic elements of sound central bank practice with respect to distress lending. Walter Bagehot (1873), who is most often credited with establishing modern LOLR theory, expanded on Thornton’s work (although without referring to him by name).