AMR: The questions deal with research and diffusion, so let’s start with research. How has the theme “uses of the past” shaped your research?
ML: It has increased my understanding of the role of regulations and also the interaction between regulations and actors on the market. An important part of my work has been to evaluate the function of bank legislation, and how this has framed the banks’ business.
AMR: How have you dealt with this framework from a methodological perspective?
ML: Well, this research needed both a qualitative and a quantitative methodology. The qualitative approach is based on legislation, but it is also important to look at the official investigations and other preparatory work connected to the legislation. And it can also be important to review documents from the Bank Inspection board in Sweden. Because that is where you can trace how regulations are interpreted.
A large part of the regulatory measures can be evaluated with a quantitative method as well. For example, you can look at the consequences of capital adequacy regulations through calculations based on the definitions in legislation. But it is also possible to evaluate the effects of regulations that have needed to be introduced through quantitative methods.
My basic belief is that it is important to combine qualitative and quantitative methods as well as macro and micro approaches. Thus, if you look at the long-term changes of, for example, the market for banking credit it is also important to look at the way individual banks acted.
AMR: If we move on to the diffusion of research. Can you give an example of your research with a close parallel to a current debate?
ML: Yes, I would say that most current research questions stem from contemporary problems in Swedish and International banking and also in the development of regulations during the last 20 years. The best examples are the evaluation I have done on capital adequacy regulation during the interwar period – during two banking crises. The other example deals with the relationship between deposits and lending. To what extent can the banks increase their lending beyond the deposits – and does that need to be regulated?
AMR: How did your UPIER research help you improve your understanding of policy making?
ML: Oh, a lot. It has given me the possibility to test new methods and analyse problems that have really caught my interest.
AMR: How could policymakers benefit from the past to take better decisions?
ML: Since regulation of the financial market has become increasingly important during the last decades, I think we can learn a lot from looking at previous development. How have regulations been implemented and accepted by actors on the market? And has the implementation of regulations produced the desired result or have there been unintended consequences? From an overall perspective it is important to introduce regulations that are consistent with tradition, or should I say the regulatory regimes. It is always difficult to change a regulatory regime and get full acceptance for this by the actors. We could see this for example, in Sweden in the 1950s, when regulations were tightened, and this led to a discussion between the central bank and the commercial banks that lasted for decades.
AMR: Thank you very much.