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The Swedish model for resolving the banking crisis of 1991 - 93. Seven reasons why it was successful

Author

Listed:
  • Lars Jonung

Abstract

This study presents the main features of the Swedish approach for resolving the banking crisis of 1991-93 by condensing them into seven policy lessons. The main features of the Swedish approach to the banking crisis of 1991-93 concern political unity, a government blanket guarantee, swift policy action,an adequate legal and institutional framework, full disclosure of information, a differentiated resolution policy, and the proper design of macroeconomic policies.

Suggested Citation

  • Lars Jonung, 2009. "The Swedish model for resolving the banking crisis of 1991 - 93. Seven reasons why it was successful," European Economy - Economic Papers 2008 - 2015 360, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0360
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    File URL: https://ec.europa.eu/economy_finance/publications/pages/publication14098_en.pdf
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    Citations

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    Cited by:

    1. Dewatripont, Mathias, 2014. "European banking: Bailout, bail-in and state aid control," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 37-43.
    2. Daniel Heymann & Axel Leijonhufvud, 2014. "Multiple Choices: Economic Policies in Crisis," International Economic Association Series, in: Joseph E. Stiglitz & Daniel Heymann (ed.), Life After Debt, chapter 5, pages 281-308, Palgrave Macmillan.
    3. Hryckiewicz, Aneta, 2014. "The problem with government interventions: The wrong banks, inadequate strategies, or ineffective measures?," MPRA Paper 64074, University Library of Munich, Germany.
    4. Aida Caldera Sánchez & Alain de Serres & Naomitsu Yashiro, 2017. "Reforming in a Difficult Macroeconomic Context: A Review of Issues and Recent Literature," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-41, February.
    5. Suarez, Javier & Sánchez Serrano, Antonio, 2018. "Approaching non-performing loans from a macroprudential angle," Report of the Advisory Scientific Committee 7, European Systemic Risk Board.
    6. van Riet, Ad, 2010. "Euro area fiscal policies and the crisis," Occasional Paper Series 109, European Central Bank.
    7. Huixin Bi & Eric M. Leeper, 2010. "Sovereign Debt Risk Premia and Fiscal Policy in Sweden," NBER Working Papers 15810, National Bureau of Economic Research, Inc.
    8. Ambrosius, Christian, 2017. "What explains the speed of recovery from banking crises?," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 257-287.
    9. Huixin Bi & Eric M. Leeper, 2013. "Analyzing Fiscal Sustainability," Staff Working Papers 13-27, Bank of Canada.
    10. Jean-Claude Trichet, 2013. "Unconventional Monetary Policy Measures: Principles-Conditions-Raison d’etre," International Journal of Central Banking, International Journal of Central Banking, vol. 9(1), pages 229-250, January.
    11. Spiezia, Vincenzo. & Tobin, Steven. & Torres, Raymond. & Kühn, Stefan. & López Mourelo, Elva. & Pignatti, Clemente. & Samaan, Daniel. & Escudero, Verónica., 2012. "EuroZone job crisis : trends and policy responses," Studies on Growth with Equity, International Labour Office, Research Department, number 994712143402676, April.
    12. Ulrich Volz, 2013. "Lessons of the European crisis for regional monetary and financial integration in East Asia," Asia Europe Journal, Springer, vol. 11(4), pages 355-376, December.
    13. Sean Hundtofte, 2017. "Does going easy on distressed banks help the macroeconomy?," Staff Reports 823, Federal Reserve Bank of New York.
    14. Eric M. Leeper, 2009. "Anchoring fiscal expectations," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 17-42, September.
    15. Susan Lund & Charles Roxburgh, 2010. "Debt and Deleveraging," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 11(2), pages 1-30, April.
    16. repec:ces:ifodic:v:7:y:2009:i:3:p:14567082 is not listed on IDEAS
    17. Grout, Paul A. & Zalewska, Anna, 2016. "Stock market risk in the financial crisis," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 326-345.
    18. Ulrich Suntum & Cordelius Ilgmann, 2013. "Bad banks: a proposal based on German financial history," European Journal of Law and Economics, Springer, vol. 35(3), pages 367-384, June.
    19. Hongyi Chen & Lars Jonung & Olaf Unteroberdoerster, 2014. "Lessons for China from Financial Liberalization in Scandinavia," Asian Economic Papers, MIT Press, vol. 13(1), pages 1-44, Winter.
    20. B. Espen Eckbo, 2010. "Banking System Bailout‐Scandinavian Style," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(3), pages 85-93, June.
    21. Spiezia, Vincenzo & Tobin, Steven & Torres, Raymond & Kühn, Stefan & López Mourelo, Elva & Pignatti, Clemente & Samaan, Daniel & Escudero, Verónica, 2012. "EuroZone job crisis : trends and policy responses," Studies on Growth with Equity 471214, International Labour Office, Research Department.
    22. Shinji Asanuma, 2015. "Fiscal Sustainability & Competitiveness in Europe and Asia by Ramkishen S. Rajan , Tan Khee Giap and Tan Kong Yam Palgrave Macmillan , New York , 2014 xii+202. ISBN 978 1 137 40696 5," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 29(1), pages 194-195, May.
    23. Nybom, Martin & Stuhler, Jan, 2021. "Intergenerational mobility in a recession: Evidence from Sweden," Working Paper Series 2021:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    24. Raymond TORRES, 2013. "Introduction: European labour markets in economic crisis," International Labour Review, International Labour Organization, vol. 152(2), pages 167-173, June.
    25. Michael Diemer & Uwe Vollmer, 2015. "What makes banking crisis resolution difficult? Lessons from Japan and the Nordic Countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 251-277, December.

    More about this item

    Keywords

    The Swedish model for resolving the banking crisis of 1991-93; financial crisis; bank resolution; solvency crisis; banking crisis; moral hazard; Sweden; Jonung;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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