Icelands Meltdown: The rise and fall of international banking in the North Atlantic

Robert Wade () and Silla Sigurgeirsdottir ()

Brazilian Journal of Political Economy, 2011, vol. 31, issue 5, 684-698

Abstract: This paper shows how rapid privatization and liberalization of Iceland's small local banks around 2000, combined with well-developed crony relations among the elite, enabled a small group of financiers to leverage government-guaranteed deposits into a vast wave of mergers and acquisitions abroad, and redistribute enough of the profits back home to make the economy boom. Negative policy feedback loops were systematically undermined. The incoming left-wing government, with IMF support, has managed to protect the bulk of the population from the worst of the effects. JEL Classification: E5.

Keywords: Iceland; financial crisis; privatization; banking crisis (search for similar items in EconPapers)
Date: 2011
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