This paper analyses the introduction and use of capital adequacy requirements in Swedish commercial banking during the period 1915-1935. Early regulation was introduced in the Bank law of 1911; it aimed to ensure economic stability in the banks. This paper analyses the effects of this regulatory change for a range of different banks. How were capital adequacy rules designed, and how did banks of different sizes react to their introduction? Were there any alterations to the capital adequacy requirements, and if so, how did the banks react to these? The analysis is based on Swedish commercial banks’ annual and monthly reports, which was gathered by the Bank Inspection Board and published by the Swedish Central Statistical Office.
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