ABSTRACT
Following the freeze of financial markets in 2008, and the ensuing Great Recession that has been with us since, studying national varieties of financial crises has become a veritable growth industry in social science. In the first part of the crisis, larger states such as the United States and the United Kingdom, or the dramatic blowups of small states such as Iceland and Ireland, took most headlines. Recently, however, both academics and policy makers are showing growing interest in the fate of small states that did not blow up but rather did relatively well. Sweden is an obvious candidate, since it got out of the crisis fast and practically unscathed. Denmark is another case that is catching the interest of the international regulatory community, for the sector-financed bailout model issued in 2008 as well as its ambitious resolution regime introduced in 2010 to replace the general state guarantee. Denmark is an outlier because—at least in the knowledge of this author—it is the only Western state that was hit by the crisis that made the banking sector pay. As a contrast, the common approach to bailing out banks was that the state socialized bank-sector debt through issuing state guarantees that were not financed by the sector itself. For example, there are different versions of this model in countries such as the Netherlands and Belgium (Kickert 2012a, 2012b) and a more extreme version in Ireland—where the state ended up having to ask the International Monetary Fund for help—or Iceland, which defaulted on its private bank debt. The chapter asks how Danish policy makers were able to get the Danish banking sector to participate so relatively actively in the handling of the crisis. In short, it is argued that an institutional setting for cooperation and negotiation between peak organizations and the state, a tradition in the banking sector for cooperation during crises combined with specific well-consolidated ideas about bank crises, created a setting conducive for policy learning and burden sharing.
