TY - JOUR
T1 - The highs and the lows
T2 - bank failures in Sweden through inflation and deflation, 1914-1926
AU - Kenny, Seán
AU - Ögren, Anders
AU - Zhao, Liang
N1 - Publisher Copyright:
© The Author(s) 2023. Published by Oxford University Press on behalf of the European Historical Economics Society.
PY - 2023/5/1
Y1 - 2023/5/1
N2 - 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.
AB - 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.
UR - https://www.scopus.com/pages/publications/85166180157
U2 - 10.1093/ereh/head001
DO - 10.1093/ereh/head001
M3 - Article
AN - SCOPUS:85166180157
SN - 1361-4916
VL - 27
SP - 223
EP - 249
JO - European Review of Economic History
JF - European Review of Economic History
IS - 2
ER -
