SSE Working Paper Series in Economic History,
Stockholm School of Economics

Abstract: This article treats the role of the state in bailouts, i.e. government objectives and measures during financial crises. The purpose is to unveil to what extent the acting of the state differed in the latest crises in Denmark and Sweden, and critically analyse which objectives justified setting up organisations for financial stability. We compare intrinsic principles and perceptions for government intervention, with a focus on bailouts and state-owned banks. We argue that reasons for observed differences in the implementation of measures in Sweden and Denmark date back to the early phases of capitalism in the 19th century, i.e. is part of an historical institutional pattern. The similarities shown are limited to the bailouts schemes, and indicate that there is a common international standard for a public-private arrangement concerning financial stability. Our results relate to the discussion of launching effective and legitimate state policies after a severe financial crisis.

Keywords: Banking crises; Financial history; Government intervention; Bailout; State-ownership.

JEL-codes: N24

23 pages, December 20, 2013

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