Local Autonomy in Danish Banking: Historical Roots — Persistence and Change

The central role of small and medium-sized enterprises located outside the national capital of Copenhagen has been increasingly seen as essential to understanding the nature of the Danish business system (Kristensen, 1995). These firms exist alongside and in relation to the large international Danish companies headquartered in Copenhagen. The Danish financial system has historically reflected a similar tension between locally based banks with close connections to local communities and the large national banks headquartered in Copenhagen with their close links to large firms. However, unlike in other countries, processes of concentration and merger in the banking industry and the impact of deregulation do not appear to have destroyed local branch autonomy. Rather, the nature of local autonomy has changed. No longer is autonomy secured by ownership independence; it now relies on two factors, first, the devolution of powers from the centre, and second, the active maintenance by bank branch staff of close relations with the local community.