The Highs and the Lows: Bank failures in Sweden through inflation and deflation, 1914-1926

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Sammanfattning

This paper revisits the Swedish banking crisis (1919-26) that materialized as post war deflation replaced wartime inflation (1914-18). 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 i) leverage, ii) weaker collateral loans and iii) foreign borrowing during the boom were all associated with bank failure in post- war Sweden (1919-26).
Originalspråkengelska
Antal sidor91
StatusPublished - 2023

Publikationsserier

NamnLund Papers in Economic History
FörlagDepartment of Economic History, Lund University
Nr.2023:246

Ämnesklassifikation (UKÄ)

  • Ekonomisk historia

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