Iceland's meltdown: the rise and fall of international banking in the North Atlantic

This paper shows how rapid privatization and liberalization of Iceland's small local banks around 2000, combined with well-developed crony relations among the elite, enabled a small group of financiers to leverage government-guaranteed deposits into a vast wave of mergers and acquisitions abroa...

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Bibliographic Details
Published in:Revista de Economia Política
Main Authors: Robert H. Wade, Silla Sigurgeirsdottir
Format: Article in Journal/Newspaper
Language:English
Portuguese
Published: Editora 34 2011
Subjects:
Iceland
financial crisis
privatization
banking crisis
Economics as a science
HB71-74
North Atlantic
Online Access:https://doi.org/10.1590/S0101-31572011000500001
https://doaj.org/article/45c91bc991044e5db62836fea7a5f712
Description
Summary:This paper shows how rapid privatization and liberalization of Iceland's small local banks around 2000, combined with well-developed crony relations among the elite, enabled a small group of financiers to leverage government-guaranteed deposits into a vast wave of mergers and acquisitions abroad, and redistribute enough of the profits back home to make the economy boom. Negative policy feedback loops were systematically undermined. The incoming left-wing government, with IMF support, has managed to protect the bulk of the population from the worst of the effects.

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