The highs and the lows: bank failures in Sweden through inflation and deflation, 1914–1926.

This article analyzes the Swedish banking crisis of 1919–1926, focusing on how the abrupt shift from wartime inflation to post-war deflation affected bank failures. Using survival analysis on detailed balance sheet data and biographical information for 75 commercial banks, the study finds that maturity mismatches—particularly banks' reliance on shorter-term liabilities and loans—were key predictors of distress, consistent with Irving Fisher's debt deflation theory. Additionally, increased leverage, poor-quality "loan on name" collateral, and foreign currency borrowing during the wartime boom heightened vulnerability, especially as the Swedish krona's post-war exchange rate fluctuations increased foreign debt burdens. The research also offers tentative support for institutional factors, noting that younger banks and those engaged in aggressive mergers were more prone to failure, and it revises the crisis timeline to show distress persisting until 1926.