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The highs and the lows: bank failures in Sweden through inflation and deflation, 1914–1926
- Source :
- European Review of Economic History. 27:223-249
- Publication Year :
- 2023
- Publisher :
- Oxford University Press (OUP), 2023.
-
Abstract
- This paper revisits the Swedish banking crisis (1919–1926) that materialized as post-war deflation replaced wartime inflation (1914–1918). Inspired by Fisher’s “debt deflation theory,” we employ survival analysis to “predict” which banks would fail, given certain ex-ante bank characteristics. Our tests support the theory; maturity structures mattered most in a regime of falling prices, with vulnerable shorter-term customer loans and bank liabilities representing the most consistent cause of bank distress in the crisis. Similarly, stronger growth in (1) leverage, (2) weaker collateral loans, and (3) foreign borrowing during the boom were all associated with bank failure. Jan Wallander and Tom Hedelius projects Banking on the local level: Growth, income and market integration (P17-0157)
Details
- ISSN :
- 14740044 and 13614916
- Volume :
- 27
- Database :
- OpenAIRE
- Journal :
- European Review of Economic History
- Accession number :
- edsair.doi.dedup.....d4e4037681685e580d08bb35442203d3