Real-Economy Cost of Regulation in the Swedish Banking System

Over the coming years, banks will need to comply with a swathe of new regulations concerning capital, leverage, liquidity and business conduct.

These new rules aim to make the financial system more stable and to protect taxpayers from the cost of bailing out insolvent banks. Such regulations also bring costs – in the first instance, for the regulated banks, but in the longer term, potentially also for banks’ customers and society more broadly. An assessment of proposed regulations must consider these costs, as well as the intended benefits.

Commissioned by the Swedish Bankers’ Association, this report analyses the implications of financial regulations for the Swedish economy. We have conducted a review of relevant research, and interpreted the findings in the context of the Swedish market. The purpose of this paper is not to make recommendations, but to inform policymakers and analysts about the way pending financial regulations are likely to affect the real economy.

Real-Economy Cost Of Regulation In The Swedish Banking System