The Nordic Banking Crises: Pitfalls in Financial Liberalization?

June 1, 1995

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Burkhard Drees, and Ceyla Pazarbasioglu. The Nordic Banking Crises: Pitfalls in Financial Liberalization?, (USA: International Monetary Fund, 1995) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the recent banking crises in Finland, Norway and Sweden in an attempt to draw some policy conclusions from their experiences. In all three countries, the timing of deregulation coincided with a strongly expansionary macroeconomic momentum. Delayed policy responses, as well as structural characteristics of the financial systems, and banks’ inadequate internal risk management controls were important determinants of the consequences of the transition from tightly regulated to more or less competitive financial systems. In the absence of strengthened prudential banking supervision, these incentives coupled with expectations of government intervention in the event of a crisis prompted many Nordic banks to increase their lending excessively.

Subject: Bank credit, Banking, Commercial banks, Credit, Distressed assets, Financial institutions, Financial sector policy and analysis, Loans, Money

Keywords: Asset-based lending, Bank credit, Beneficiary bank, Capital base, Commercial banks, Credit, Credit market, Credit rationing, Distressed assets, Equity capital, Financial system, Foreign currency, Funding cost, Loan loss, Loans, Market share, Parent company, Price competition, Support measure, WP

Publication Details

Pages:

70
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1995/061
Stock No:

WPIEA0611995
ISBN:

9781451848113
ISSN:

1018-5941

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