The political economy of banking regulation : interest groups and rational choice in the forming of the Swedish banking system, 1822 – 1921

We studied the implementation of banking regulation in Sweden from the origin of the commercial banking system until the important Banking Act of 1911. We also looked at the effects of these regulations. We found that regulations were often influenced by banker interests rather than by macroeconomic rationale, to the extent that banking legislation was an endogenous part of the banking business. Regulatory regimes that were rule-based (non-discretionary) and open for competition by providing clear and general benchmarks for establishments were more beneficial for financial and economic development than more protective and discretionary legislation. On the other hand, protective and discretionary legislation went hand in hand with bankers having greater influence on legislation