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Rigid regulation, dynamic markets and adaptive enforcement
Linköping University, Department of Management and Engineering, Economics. Linköping University, Faculty of Arts and Sciences.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

When market adopts a new product, service or organization of business, the existing regulation becomes increasingly incomplete due to the slow pace of the regulatory process. For several reasons, this mismatch is inevitable, and even has its benefits. The ‘rules of the game’ must be stable for economic actors to plan for and initiate the uncertain trial-and-error process of innovation. At the same time however, the institutional structure of the state must also be flexible to facilitate for these market dynamics. In this article, the adaptive enforcement of financial regulations made by supervisors is argued to be an example of this institutional flexibility. The adaptive enforcement can help to bridge the gap between the ‘rigid’ and incomplete regulation and a changed market, say after a broad adoption of an innovation. The financial markets are commonly recognized as prone to innovate and adopt innovations, so this may be a market for which the mismatch between the ‘rigid regulation’ and the dynamic market at time is especially troublesome. Through its room for credible discretion, the enforcer of the financial regulation ideally adapts its enforcement of ‘rigid’ regulation to a changing market, such as following a broad market adoption of an innovation. In an empirical case, it is shown how the Swedish banking supervisor during the 1910s adapted its enforcement of the banking act to the very dynamic bank market.

Keyword [en]
Regulation; enforcement; discretion; Sweden
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:liu:diva-77436OAI: oai:DiVA.org:liu-77436DiVA: diva2:526938
Available from: 2012-05-15 Created: 2012-05-15 Last updated: 2012-05-15
In thesis
1. Theoretical and empirical accounts of Swedish financial supervision in the twentieth century
Open this publication in new window or tab >>Theoretical and empirical accounts of Swedish financial supervision in the twentieth century
2012 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The thesis is concerned with the history of financial supervision in Sweden during the twentieth century up to the financial crisis in the early 1990s. To this end a theoretical framework is developed which is based on institutional economics, law and economics, theories on bureaucracies, regulatory enforcement and policy analysis. Except for the attempt to propose how financial supervision and supervisors could be understood theoretically, the thesis address problems ranging from the organization of supervision in relation to regulation and the changes of the regulated market, the constraints and abilities put on supervisors in different institutional arrangements and regulatory regimes, and the competence of supervisors. The extensive use of empirical data aims to make the thesis a contribution also to financial history research in general, and the growing research on the histories of financial supervision in particular.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2012. 106 p.
Series
Linköping Studies in Arts and Science, ISSN 0282-9800 ; 555
Keyword
Financial supervision, institutional economics, adaptive enforcement, financial history, Sweden
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-77439 (URN)978-91-7519-865-1 (ISBN)
Public defence
2012-06-07, C3, Hus C, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2012-05-15 Created: 2012-05-15 Last updated: 2012-05-15Bibliographically approved

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Wendschlag, Mikael

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Output format
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  • asciidoc
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