In the last few years financial supervisors have received major criticism. In the light of the global financial crisis, evidence for failures of supervisors seems to abound in many countries. One common explanation to the perceived failures has been that the supervisory personnel has lacked in competence. A handful of researchers have taken an interest in the matter of financial supervisors’ competence, suggesting that the staff’s previous work experience is a relevant indicator of its competence. However, due to a lack of data, only a few empirical studies have been conducted so far, and none have related the data specifically to the historical context in which the supervisor as been active. This article uses empirical data for the staff of the Swedish Bank Inspection Board between 1910 and 1990 to investigate how the staffs’ work experience, as an indicator of supervisor competence, relates to the financial history of Sweden during this time period. The important events of the financial history are believed to be financial and banking crises in addition to the regulatory regimes in Sweden in the twentieth century.
According to the empirical case, the staff of the surveyed supervisory agency on average had very little work experience from outside the agency before and at the start of the major financial crisis in Sweden in the early 1990s. Supervisors’ lack of work experience from the private financial sector is often assumed to lead to a lower quality of the supervision. However, in the decade before the financial crisis in the early 1920s, the Inspection Board’s staff had plenty of work experience from the private sector. However, they lacked experience from working as supervisors. During the Great Depression years, an international crisis which Sweden went through comparatively unharmed, the Inspection Board had its most experienced staff of the surveyed time period. In the ‘state control’ regime that followed the Second World War, the agency lacked staff competent from other parts of the public sector, indicating its lack of skill to engage in the regulatory process during this period.