Bank Regulation in Denmark from 1880 to World War Two: Public Interests and Private Interests

Abstract

This article analyses the bank regulation process in Denmark until the passing of the second Bank Act of 1930. It is demonstrated that the regulatory initiatives were the results of banking crises and that the explicit rationale for regulation was an attempt to avoid future banking crises i.e. to secure financial stability. However, even though the public interest was at the centre of the argument, private interests also affected the outcome of the regulatory process, and to a certain degree there was no conflict between public and private interests. The main private interests were the commercial banks and the savings banks, respectively, and it is shown that the savings banks held a strong position in Parliament, which enabled them to fend of proposed restrictions affecting their business. Thus, the competition between the savings banks and the commercial banks influenced Danish bank regulation to a considerable degree which meant that both private and public interests were important in determining the outcome.