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The Formalization of Banking Supervision in Japan and Sweden

Author

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  • Eiji HOTORI
  • Mikael WENDSCHLAG

Abstract

This study examines the formalization of banking supervision in Japan and Sweden that occurred in the decades around 1900. Using an incremental change approach, we examine the respective cases along three dimensions: (a) the legal framework, (b) the banking supervisory agency, and (c) bank supervisory activities. Through this comparative analysis, we find several similarities and differences. The most important similarity we find is that financial crises—generally considered to be a primary driver of major regulatory and supervisory reforms—did not play a main role in the formalization of supervision in either Japan or Sweden. Rather, formalization was an incremental change process closely linked to the organic development of the banking sector, the general public’s increasing exposure to the banks as deposit holders and borrowers, and the increased need for professionalization of the banking sector. This finding suggests that our approach is applicable to any country where the formalization of supervision took place without being prompted by a specific event such as a financial crisis.

Suggested Citation

  • Eiji HOTORI & Mikael WENDSCHLAG, 2019. "The Formalization of Banking Supervision in Japan and Sweden," Social Science Japan Journal, University of Tokyo and Oxford University Press, vol. 22(2), pages 211-228.
    • Handle: RePEc:oup:sscijp:v:22:y:2019:i:2:p:211-228.
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    File URL: http://hdl.handle.net/10.1093/ssjj/jyz011
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    Cited by:

    1. Dario Pellegrino & Marco Molteni, 2021. "Lessons from the Early Establishment of Banking Supervision in Italy (1926-1936)," Quaderni di storia economica (Economic History Working Papers) 48, Bank of Italy, Economic Research and International Relations Area.

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