The Swedish Finance Company Crisis -- Could It Have Been Anticipated?

The Swedish finance company crisis was a kind of "run" that happened in September, 1990. It marked the beginning of the Swedish banking crisis of the early 1990's. The crisis was initially focused on the finance company Nyckeln. The specific negative information about Nyckeln is identified, as well as how it spread only very late, or not at all, to the supervisory authority and to the banks that were involved in lending to the finance companies. The paper then inquires whether there were warning signs of the forthcoming crisis in capital market information and other public information, by means of the usual event study methodology. The data that are used include indices for the banking industry and the real estate and construction industry, and share prices and trading volume for finance companies. The conclusion is that the crisis really came as a surprise, with very little advance warning.