A suspended referee in a new game – the Swedish Bank Inspection Board in the 1980s and early 1990s
(English)Manuscript (preprint) (Other academic)
After the financial crisis in Sweden in the early 1990s the Bank Inspection Board, the agency responsible for the supervision of all credit institutes and the securities trade, received much criticism for its ‘evident’ failure. Despite the critique, few accounts of what the Inspection did and did not do in the decade preceding the crisis have been presented. Internationally too, empirical studies of the work of financial supervisors preceding a financial crisis are rare. This article provides the most detailed empirical account to date of the work of the Bank Inspection Board between 1980 and mid-1991.
It is found that the Inspection may have allocated too much of its scarce resources on matters not directly related to its objectives, such as consumer complaints. Support for the criticism that the supervisors lacked competence can also be found in data on the work experience of the Inspection’s staff. However, several features of the institutional structure regulating the Inspection also constrained it from adapting to the markets changes, especially the budget application process and the need for a parliament decision for the Inspection to reorganize internally. In addition, the ‘sidelined’ role of the Inspection in the ‘state control’ regulatory regime between the 1940s and late 1970s made it unprepared to adapt its regulatory enforcement during the 1980s when the Riksbank dismantled its regulatory enforcement.
Banking supervision; regulatory regimes; Sweden
Economics and Business
IdentifiersURN: urn:nbn:se:liu:diva-77438OAI: oai:DiVA.org:liu-77438DiVA: diva2:526941