The Swedish Banking Crisis: The Invisible Hand Shaking the Visible Hand

Lars Engwall

Chapter 8 in Regulation and Deregulation in European Financial Services, 1997, pp 178-200 from Palgrave Macmillan

Abstract: Abstract In many countries the 1980s brought radical changes to the banking industry in two ways that affected working conditions: (1) the development of computer and communication technology, and (2) deregulation. Whereas the first of these can be described as a rapid but fairly continuous process, the second was more in the nature of a single episode. In a sense it can be seen as a huge field experiment, in which the basic rules of the game were suddenly switched from one system to another. Speaking in metaphors we could say that the invisible hand, introduced into economic theory in 1776 by Adam Smith in the Wealth of Nations, had long been pinioned but was suddenly released. This in turn put considerable pressure on bank managers to adapt to the new conditions. Extending the metaphor we could then say that the visible hand, Alfred D. Chandler’s term for management (Chandler, 1977), has been shaken by the invisible hand.

Keywords: Banking Industry; Foreign Bank; Saving Bank; Invisible Hand; Branch Bank (search for similar items in EconPapers)
Date: 1997
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DOI: 10.1007/978-1-349-14000-8_9

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