Organizational foundations and closures in a regulated environment: Swedish commercial banks 1831-1990

Abstract

This study analyses the foundations and closures of the total population of Swedish commercial banks, 1831-1990. With reference to the comparatively rigid control of entries and exits in banking, four hypotheses are formulated: (1) acquisitions constitute the principal method of closure in banking; (2) the early years are less hazardous for members of the banking industry than for members of other industries; (3) the survival rates of banks are negatively related to the freedom of bank operations; and (4) the survival rates of banks are negatively related to the degree to which customer relationships already exist. The analysis provides evidence supporting the four hypotheses.