Monthly credit from and deposits in Swedish commercial banks, 1875-2020

Since the global financial crisis in 2008, there has been an elevated interest in private debt and as a macroeconomic variable. In light of the lack of high-frequency data, this study presents a unique monthly time series dataset on credit from and deposits in Swedish commercial banks from 1875 to 2020, covering 1,752 monthly observations and most of Swedish commercial banking history. In a first application, the study examines to what extent money in Sweden has been exogenous, created independently of demand by the central bank, or endogenous, created in response to demand by commercial banks, during different institutional settings. The results, derived via cointegration and impulse-response functions, show that though the relationship between deposits and credit has changed over time, both theories often hold validity simultaneously. While changes in deposits often have had significant impact on credit, the opposite has also been true. There are, however, differences between different regulatory regimes, as well as for different groups of banks.

Sweden during this period has been exogenous, created independently of demand by the central bank, or endogenous, created in response to demand by commercial banks in competition. Thus, the second aim of the article is to shed light on a central yet controversial issue which has remained unsettled for centuries.
The next section is a literature review, on earlier research and theory. Section II consists of a short historical account of the institutional setting for Swedish commercial banks. Section III describes the sources and the data compilation, while the methodology used is described in Section IV. Section V presents the results of these econometric tests, and Section VI is a concluding discussion. The study also contains an appendix with further details of the methodology used.

I
There are plenty of data on credit, deposits and monetary aggregates, both nationally and in international compilations. As with economic data in general, however, the further back in history, the scarcer the data. The richest and most long-term annual time series on money and private credit is found in the Jordà-Schularick-Taylor Macrohistory Database (Jordà et al. ), an unbalanced panel covering  countries from  to . For Sweden, there are annual data on credit from banks and mortgage institutions to the non-bank public since  in Ahnland (), and annual data on both credit and deposits for individual commercial banks from  to  in Häggqvist et al. (, ).
The most comprehensive long-term quarterly time series dataset is that of the Bank for International Settlements' () statistics on credit to the non-financial sector, also an unbalanced panel with data, covering several credit categories for  countries from the third quarter since  to the third quarter . There are also some national long-term datasets with monthly data on money aggregates. For example, Bank of England () has monthly data on monetary aggregates in the United Kingdom from  to  and monthly data on lending from banks for the United Kingdom since  to . Metcalf et al. () have monthly data on monetary aggregates, but not on credit, for Canada from  to .
The debate on whether money is exogenous or endogenous has been ongoing since the clash between the Currency School and the Banking School during the nineteenth century and even before that (Arestis and Moore ). During the twentieth century the neoclassical synthesis argued for the exogenous position, while particularly post-Keynesians (Sierón ) argued for the oppositealthough an endogenous view was also held by other notable scholars, not least Schumpeter (, pp. -) and Wicksell ( []). The exogenous money view is that deposits cause credit, as economic agents deposit their savings with banks, which in turn lend it to others. In this scenario banks are mere financial intermediators. The money supply is here imposed exogenously by the government, mostly the central bank.


Proponents of the endogenous view on the other hand note that banks create deposits when they grant a loan. The fact that deposits created may leave the bank for another bank shortly after they are created forces banks to look for funding. This is done mainly via either previous deposits or the clearing function of the interbank market. In the latter case it enables a banking system collectively to expand both credit and deposits. This process is, however, restrained by reserve requirements, whether voluntary but customary or mandatory by regulation. A fixed deposit-to-reserve ratio applies a 'speed limit' to bank money creation, making money creation exogenousbeyond the influence of market forces. Countering this argument, the endogenous view claims that reserves may fluctuate. For instance, according to Wicksell ( []), when the market interest rate is lower than the 'natural rate' (the rate equating longterm demand for, and supply of, capital) investors borrow more, so that commercial banks reduce their preferred reserves and the money supply increases.
Reckless lending is ultimately bad for business and will drive up funding costs for a bank, but short-term market mechanisms may cloud long-term risk-assessment. For instance, even if a bank may be prudential when it comes to demands on collateral, collateral in assets such as stocks and real estate fluctuates and has historically been prone to speculation. Moreover, access to credit may inflate (or deflate) asset prices, creating mutual feedback between credit and collateral. Minsky () has demonstrated how lending and borrowing may become increasingly risky and speculative over a financial cycle. Furthermore, competition/concentration on the banking market may affect access to and the price of credit (Bonaccorsi di Patti and Dell'Arricia ), and booms and busts may have an impact on the degree of competition.
Scholars have also questioned the exogenous-endogenous dichotomy altogether, arguing that money is neither completely one or the other (Chick and Dow ; McLeay et al. ; Sierón ), and that the degree to which it is exogenous or endogenous is contingent on a changing institutional setting (e.g. Chick , pp. -; Niggle ; Sirerón ). As Chick (, pp. -) points out in her evolutionary approach to the English banking system, increasing bank branching and clearing arrangements during early banking history turned deposits increasingly from being stores of value into transactions balances. Money, Chick argues, was however still largely exogenous at this early stage, not least since bank notes and deposits were convertible to gold or silver specie, the supply of which was largely exogenous. At the same time, however, reserve requirements were often subject to the demand for credit and the prudence, or lack thereof, of bankers (Niggle ). Capital requirements also have an impact on the risk-taking and lending of the banks, as does the amount of both non-deposit liabilities and non-loan assets of differing maturity and liquidity.
As financial regulation toughened over the course of the twentieth century, the ability by the banks to create money also became restrained. Interest rate regulation, capital controls and credit rationing imposed by government all contributed to this. Consequently, as those regulations eased internationally particularly during the M O N T H LY C R E D I T F R O M A N D D E P O S I T S I N S W E D I S H  s and s (e.g. Forsyth and Notermans ), money creation by banks eased too. For instance, competing banks increasingly came to attract non-depository assets of institutional investors, creating new deposits, reserves and lending capacity (Chick , pp. -). More so, financial innovation in the form of liability and asset management techniques allowed banks to increase their lending for any given reserve requirement (Niggle ). Additionally, as central banks accepted responsibility for a stable financial system, a potential for extending lending beyond the reserve capacity of the banking system emerged. Thus, money became increasingly endogenous over time.

II
It is important to choose consistent criteria when making a periodisation. One such criterion in the current setting is financial regulation, an important aspect of the institutional framework for banking. The present study is based on Larsson and Söderberg (, p. ), who have identified three main regimes of financial regulation in Sweden during the twentieth centurythe Classical regime until about , the Statist regime until about , and the Market regime after that. Larsson and Söderberg also distinguish between subperiods within these regimes. Arguably, their most relevant distinction within the Market regime is between the deregulatory era until about  and the period after that. This periodisation will also be used in the present study. The - and - subperiods they identify during the Statist regime are considered too short for the study. Since the present study precedes their study, the late nineteenth-century period also needs identification. The second half of the nineteenth century has been referred to as a revolution of the Swedish financial market, due to the numerous advancements in scope and scale of the Swedish financial system (for details see Ögren , pp. -). Hence, this period is denoted as the Financial revolution.
In order to avoid the extreme and distortive circumstances of world wars, particularly the high inflation during World War I, the Classical regime is divided into the Early modern banking and Interwar banking periods. This creates the periodisation outlined in Table .
At the starting point for the current investigation, there were both unlimited liability banks (ULBs) with the right to issue notes and limited liability banks (LLBs) without that right, as well as the central bank, the Riksbank, which also competed with the privately owned commercial banks. ULB bank notes were redeemable in notes issued by the Riksbank, and the maximum amount of ULB note issuance was related to equity, reserves and credit arrangements with other banks.
According to Jonung ( []), however, the reserve requirements of ULBs were never an effective impediment to any over-issue, since they had considerable freedom to choose the composition of their reserves. When Sweden entered the gold standard in , banks had to include gold in their reserves, but this only forced minor adjustments (Jonung  []). Furthermore, even ULBs used L A R S A H N L A N D  deposits as the main source of funding even before they lost the note-issuing rights with the Bank Act enforced in . However, the fact that ULBs increased their leverage considerably after reform, even compared to LLBs, implies that reserve requirements did have a notable impact on money creation (Ögren and Kenny ). This also implies that there was a considerable difference between the possibilities for ULBs and LLBs prior to  in this respect. On the other hand, deposits were not enough to cover the lending by LLBs either, and this condition prevailed even after . For ULBs the deposit deficit was mostly covered by loans on the liability side, while LLBs utilised a variety of sources (Statistics Sweden  [-]).
Besides reserve requirements, capital requirements on the asset side of the balance sheets was another important pillar of early banking regulation affecting lending capacity. Such requirements were enforced unanimously for all under the Bank Act of , but were relaxed in  (Ögren ). The reform also allowed banks to own stocks to a limited extent, and when stocks increased in value so did lending capacity.
Stocks also increased as collateral for extended credit. In  collateral in name (personal confidence) was the most common form of collateral, but was increasingly replaced by collateral first of all in real estate and then in shares (Broberg and Ögren ). Urbanisation and incorporation thus increased the available collateral, and thereby credit. This process was further strengthened by institutional changes. For instance, the Joint Stock Company legislation of  abolished the royal approval for incorporation and drastically reduced the minimum capital requirements (Lindgren , p. ). The financial reforms and the second industrial revolution fuelled by new electrical and chemical 'genius industries' elevated the financial activity in the economy during the late Financial revolution and the Early modern banking periods. The resulting stock market boom was intimately connected to banking activities, which too expanded rapidly.
The  financial crisis was in this respect only a temporary setback, but the crisis in the early s was of a much greater magnitude and led to a ban on banks trading in stocks. The Kreuger crash in the early s exacerbated the regulatory efforts, and

M O N T H LY C R E D I T F R O M A N D D E P O S I T S I N S W E D I S H
 banks were also banned from owning stocks altogether. While World War II induced a command economy with government price and currency controls, the latter kept intact until , the full regulatory regime change, however, only came after the war. The s and s saw a range of new measures, such as tough reserve requirements, penal interest rates, bank liquidity quotas, ceilings for bank lending, regulation for deposits in the Riksbank, bond issue regulation, and duties to invest in treasury and housing bonds (Nygren , pp. -). The consequence was a stagnation in bank lending and borrowing. Mainly from , reserve requirements became an important tool for the monetary policy of the Riksbank. If funds at the end of the day, after interbank clearance, fell below the reserve requirements, banks had to seek funding from the Riksbank, but with a penalty rate. By manipulating the reserve requirements, the Riksbank could thus relax or tighten monetary policy. Together with higher penalty rates, this was also used in order to raise interest rates on the money market in the wake of currency outflows, which the capital controls were unable to stave off. The highest level was seen in  during the Volcker shock, when bank reserve requirements were set at  per cent.
Most of the financial regulations were, however, reversed during the Deregulation period of -, including the credit ceilings (), the capital controls () and the reserve requirements for banks () (Sellin ). Particularly the removal of credit ceilings had a dramatic effect on bank lending, greatly contributing to the stock and real estate bubble of the late s. Deposits did not grow in tandem with credit. The burst of that bubble, ending with the currency crisis for the Swedish Krona and its associated interest rate hike in , correspondingly shrank lending by the banks.
The Deregulation period and Market regime were not, however, devoid of new regulation. Internationally, the Basel Accords, with a first version implemented in , imposed successively tougher capital requirements, and domestically in Sweden amortisation requirements for loans collateralised by homes was implemented from . Even so, declining inflation and interest rates pushed bank and mortgage lending to the Swedish general public to record levels towards the end of the period of investigation, raising the fear of financial instability.
The spectre of financial crisis has loomed over the Swedish banking system repeatedly since the s, but in one way or another, the government has always come to the rescue. The response of government, through funds or directly by the central bank, to the behaviour of banks in the face of boom-bust scenarios has, in Chick's terminology, altered money creation from being exogenous to being increasingly endogenous. From  the Riksbank could re-discount private banks' bills of exchange (Fregert , p. ), and essentially became a bank for other banks. According to Wetterberg (, pp. -), the measure was first used during the Baring crisis of . A proper institutionalisation of the lender of last resort function of the Riksbank came after , when banks gained the right to lend against collateral from the Riksbank at a favourable rate. Bailout funds seem to have been an even L A R S A H N L A N D  more important function during times of financial hardship, however. Ailing banks have been helped or even rescued during most of the banking crises Sweden has experienced since the s. This was the case with Jernvägshypoteksfonden in the late s, Kreditkassan in the early s and Bankstödsnämnden in the early s. Government bodies have also extended highly favourable loans to the banks in distress, including during the Krüger crash and the GFC in /.
One reason might be that the too-big-to-fail aspect of Swedish banking has increased over time. While the number of banks, and thus banking competition, increased up to the s, with a few exceptions it declined continually after that, particularly after the weeding out during banking crises. This continuing concentration may also have had a dampening impact on lending itself, in terms of both access and the price of credit (Bonaccorsi di Patti and Dell'Arricia ). High competition among banks, on the other hand, has expanded credit, as during the s and the s in Sweden.
Meanwhile, banks have become increasingly intermingled via both systemic risks associated with aggregate credit and asset markets, as well as via the interbank clearing mechanism, pioneered by Stockholm's Enskilda Bank's formation of an interbank clearing system for postal bank bills ( postremissväxlar) in . This too should have increased the endogenous element of bank money creation, according to Chick. Moreover, this endogeneity increasingly took an international form during the Market regime, as an increasing share of mainly of real estate loans was funded on international money markets rather than via deposits (Swedish Bankers' Association ). This internationalisation also introduced the use of covered bonds, securitisation and derivatives in funding loans, by which the boundaries of conventional banking were abandoned.

III
The sources on Swedish historical bank statistics are rich, with minute data on the balance sheets for all Swedish commercial banks since . From  to , the data are quarterly, but starting from January , the data appear on a monthly basis, reported to the Bank board at the Swedish treasury department (Statistics Sweden  [-]). The reported figures are taken at face value, although there may have been incentives for banks to juggle the accounts, particularly during distress, for instance by postponing credit losses. Not least since the banking supervision could revoke bank charters, this problem is deemed unsystematic and of lesser importance. Furthermore, extended credit may not always have ended up as deposits, especially during the Financial revolution period, but may rather have been kept as cash.
From January  and until December  the data are from the bank summaries of the royal bank inspection (the agency, which became independent in , changed name numerous times during the twentieth century, and merged with the insurance inspection board in  to form the financial inspection board) (Kungl.  Large savings banks and foreign bank branches are included in the data from December , and from January , lending to non-EU monetary financial institutions is included. Mergers and acquisitions among banks affect the total if the deal occurs between Swedish commercial banks and other types of banks. The largest such deal occurred in  with the merger between Postbanken and Kreditbanken. Postbanken was not a commercial bank, but from June  it is included in the commercial bank summaries, creating a break in the series. Ideally, disaggregation into different types of loans and deposits would differentiate the interaction between them (see e.g. Kashyap et al. ). This would, however, require a considerably larger investigation beyond the scope of this article, the aim of which is to compare aggregates over times. Furthermore, reported items change over time in the sources. Entries are merged or split, and sometimes new entries appear in the accounts, though they are small in significance and size. Both deposits and loans comprise accounts with different accessibility, maturity, liquidity and restrictions regarding amounts. From January  there is no longer any disaggregation in the summaries. Thus, for the sake of consistency, comparability, and the possible reach of this article, only the sum total values of borrowing and lending are reported in the dataset.
It is important to note that commercial banks have been neither the only banks nor the only credit providers in general in Sweden historically. Some of these have disappeared, such as the so-called locally organised filialbanker and folkbanker. Savings banks, sparbanker, community-based and non-profit by nature, formed from the s, thrived well into the twentieth century, as did the lesser group of farming association banks, jordbrukskassor, introduced in . Reforms in  and even more so in  harmonised banking law so that sparbanker and jordbrukskassor came to be treated on equal footing with the commercial banks. In any case, commercial banks have been the largest group of banks by far (Ahnland ).
Furthermore, rural mortgage credit associations played an important role in agricultural finance during most of the nineteenth century, and urban mortgage credit associations were active on the urban real estate market mainly from the early twentieth century. Insurance companies also engaged in the credit market to a considerable degree at the end of the nineteenth century, but less so during the twentieth century, and from the s finansbolag constituted a diverse group of creditors primarily targeting consumer credit. In response to the promotion of housing credit during the s, bank-owned bond-emitting housing mortgage institutions grew in importance, with insurance and pension funds being the main buyers, but as they have generally operated separately from the bank balance sheets their lending has mainly been left out of this investigation (this is still the case for three of the major banks).


This separation poses somewhat of a methodological challenge for the current study: some bank deposits have been lent by the parent banks to the mortgage institution subsidiaries, covering lending to the general public but outside the balance sheets of the banks proper. While such finance only amounted to a small percentage of all lending from mortgage institutions during the housing boom from the mid s to the s, it grew in importance, particularly during the s. In , bank loans accounted for some  per cent of housing mortgage institution lending, but by  the two forms of mortgage institution financingbank loans and bondswere almost equal in size (Statistics Sweden a). This can explain the large deposit surpluses of Swedish banks mainly from . Banks also emitted bonds in order to finance their lending to mortgage institution subsidiaries.
Banks have also increasingly relied on bonds themselves for financing their lending, not least covered bonds. Since  the ratio of emitted securities to deposits increased from  to  per cent (Statistics Sweden a). Traditionally this kind of finance has bridged a deposit deficit, and it continued to do so to a certain extent also after , especially between late  and early . All in all, this increasing integration of banking and housing mortgage institutions in recent decades calls for aggregation of the two. Thus, for the Market regime in -, the investigation of the relationship between credit and deposits is complemented with an examination of the relationship between credit on the one hand and deposits and bonds on the other, in - (for which there is data).
In order to be able to consider a more detailed analysis when possible, ULBs and LLBs are investigated both separately and aggregated, during the Financial revolution in -. The data on credit and deposits are displayed in Figure , as natural logarithms of the original values.
Drawing on the literature (e.g. McLeay et al. ), two control variables are introduced into the analysis: the main policy interest rate of the central bank, and GDP. Low interest rates mean cheaper money and are thus associated with a higher demand for credit. GDP is positively correlated with income and collateral generated by wealth and negatively with credit risk. Other relevant variables discussed in the current study are bank market competition/concentration, inflation and even the value of real estate and shares as sources of collateral, but lack of monthly data on these variables prevents their inclusion in the study. Monthly data on the interest rate are obtained from Waldenström (), available for the whole period (data after  have been updated by Waldenström after publication). Monthly data on GDP rely on the proxy of an index of industrial production, only available since  from Hegelund (), and used in regressions from , linked to the Statistics Sweden data on a monthly GDP indicator since  (b). To be sure, as a proxy, the Hegelund () data are not optimal and should be treated with caution, but they are the best data available.

IV
The methodology for data compilation is outlined in the previous section, and this section focuses on the methodology for the second aim of the studytesting exogeneity and endogeneity of the monetary system of Sweden throughout the period of investigation. This testing is operationalised via cointegration, estimation of long-run coefficients and impulse-response functions (IRFs).
In order to test the long-run relationship between deposits and credit, the Johansen cointegration methodology is used. Before such tests are performed, however, unit root tests are employed, but not reported, in order to determine whether the variables are stationary or not. The details of these procedures are available in the Appendix.
The target variables credit, deposits and finance are transformed into natural logarithms in order to reduce heteroscedasticity and other residual non-normality, denoted lncredit, lndeposits, and lnfinance in the results. For ULBs this becomes ULBlncredit and ULBlndeposits, for LLBs it becomes LLBlncredit and LLBlndeposits, and for banks and mortgage institutions BMlncredit and BMlnfinance. GDP is also logarithmised.
The cointegration tests, and the associated tests for lag lengths, serial correlation and non-normality are not reported in tables. Long-and short-run coefficients are, however, reported for target variables (not control variables), mostly in order to identify significant coefficients. For interpretation of long-run coefficients, their sign has to be reversed.
Identification of the dependent variable in the long-run equation is guidance by theory, whereby the assumed dependent variable is normalised to one. In this study, the two opposing theories are exogenous and endogenous money, and The IRFs are the main instrument of analysis. They indicate the predictive power of one variable over time on another variable, so-called Granger causality. In the case at hand, this means that the response in deposits from a change or impulse in credit, and vice versa, can be estimated on a monthly frequency. Bank balance sheets of assets and liabilities have had to balance in each monthly report submitted to the monitoring authority. Intrabank clearing and possible associated monetary endogeneity within a month may hence not be visible in these data. Even so, discrepancies at the aggregate level over time could show that alternative means of funding have had to be employed when credit extended has not been covered by deposits, for instance foreign lending, bond issuance or government funding via re-discounting, open market operations or bail-out funds during times of financial distress. This could be a sign of endogeneity. On the other hand, if deposits have occurred before credit, it may be a sign that the savings of the general public predate their borrowing, implying money exogeneity.

V
In this section, the econometric tests are accounted for and discussed. The results from the unit root tests, unreported in tables, confirm that the target variables (all versions of lncredit, lndeposits and lnfinance) contain unit root when in levels but are stationary when in first differences, as unit root is rejected at least at the  per cent level of significance, for all periods. The control variables are stationary in first differences as well during all periods (and sometimes stationary in levels). Also unreported, the Johansen test for cointegration tests confirm cointegration in all models, at least at the  per cent significance level, which means it is valid to estimate long-run coefficients and IRFs. Associated and unreported tests for lag serial correlation and non-normality show that neither model suffers from serial correlation, but that all of them suffer from nonnormality. Lag length obtained for each model, which differs considerably, is reported with the long-run coefficients (see Tables -).
The long-run coefficients of lndeposits when lncredit is the dependent variable, and lncredit when lndeposits is the dependent variable, are significant in the majority of cases. This is the case for the models for the - Financial revolution, when the long-run coefficients are of similar magnitude around unity regardless of whether lncredit or lndeposits is the dependent variable, and regardless of whether unlimited of limited liability banks are considered. For the - era of Early modern banking, however, only with the regression where lncredit appears as the dependent variable is the target independent variablein this case lndepositssignificant, with a fairly large coefficient. For the Interwar era, in -, both lncredit and lndeposits are significant when they appear as independent variables, though of different magnitude. Contrarily, for the highly regulated era of the Statist regime in -, neither of the variables is statistically significant when appearing as the independent variable. The Deregulation period of - displays coefficients that are very    similar to those for the interwar period. During the most recent era, the Market regime in -, again neither of the variables displays significant coefficients when appearing as the independent variable, but when BMlncredit, BMlndeposits and BMlnbonds (data for banks and mortgage institutions aggregated) are regressed in -, lnbonds is positive and significant in both models while neither of the other two variables is. However, correlation is not causation, and for the latter it is more meaningful to analyse IRFs rather than coefficients. In Figures a, a, a, a, a and a, the responses in lncredit from an impulse in lndeposits are depicted. This reflects the hypothesis that deposits generate credit, and that money is exogenous. The responses in lndeposits from an impulse in lncredit are depicted in Figures b, b, b, b, b and b, reflecting the hypothesis that credit generates deposits, and that money is endogenous. Figures a and b, and a and b, show the IRFs of the corresponding interactions but only for ULBs and LLBs respectively, in -. Figures a and b display the IRFs reflecting the interactions between lncredit and lndeposits for aggregated banks and mortgage institutions (denoted as BMlncredit and BMlndeposits) in -, once controlled for lnbonds, in addition to lnGDP and the interest rate.
In general, the results from the IRFs seem to favour the endogenous money view slightly more often than the loanable funds view, although they are far from unanimous across the periods studied. In the case when lncredit is the independent variable and lndeposits the dependent variable, both the upper and lower  per   Figure b) are examined separately. This indicates that in many cases, the displayed Granger causality is bidirectional and it is impossible to answer which came first, 'the chicken and the egg'. This is the case in -, -, - and for ULBs in -, implying that most of the time it may be impossible to decide whether loanable funds or endogenous money theory is the most correct theory historically in Sweden.
In some cases, however, this is not the case. The IRFs imply that the interactions between lncredit and lndeposits were very different between ULBs and LLBs during the Financial revolution in -. While the IRFs for ULBs (Figures a  and b) give firmer evidence for the endogenous hypothesis that credit gives rise to depositsat least over a longer time span of months, the opposite hypothesis of loanable funds has more traction for LLBs during this period (Figures a and b). LLBs had to rely more on attracting deposits from the general public when funding their lending activities, while ULBs could print money themselves, though they too relied mainly on deposits for funding and had to comply with legal reserve requirements to some extent. Endogenous money theory seems to be the more relevant theory in -, however, possibly because of the institutionalised lender of last resort role of the central bank, and/or greater freedom for banks to lend against collateral in shares. This is also valid for the Interwar banking era of -.
During the Market regime, when bonds are thrown into the mix and both banks and mortgage institutions are aggregated, there is support for neither the endogenous nor the exogenous view, as neither IRFs exceed the lower zero confidence band, although they are close. This may be seen as an indication that deposits have become less important both as a pool of loanable funds as well as being an important result of credit extension.

VI
The dataset presented in this article is, to the best of the author's knowledge, the longest monthly time series dataset on monthly credit and deposits to date, spanning  years with , monthly observations, on an aggregate level for all Swedish commercial banks. The dataset is completely balanced, meaning that there are no observational gaps in the data. Reported categories of lending from and borrowing by commercial banks to/from the general public has from time to time changed somewhat in the balance sheets, but the sums total are consistent over time. Types of deposits include, for instance, giro and chequing accounts, savings accounts and depository accounts. Major sources of credit are foreign bills of exchange, current credit accounts and loans due to different types of collateral. In addition there are some minor loan categories.
The second aim of this article, to assess to what extent money may be considered exogenous or endogenous in Sweden during the period as a whole as well as during different subperiods identified in the study with the help of the literature, is a first application of the dataset presented in the article. The results from the econometric tests do not pose unanimous support for either viewrather the evidence suggests  that credit and deposits have mostly interacted in mutual feedback during the history of Swedish of banking since . Even so, for certain periods and for certain types of banks, there is more support for one theory over the other: while endogenous money theory seems to have been more relevant for ULBs during the Financial revolution in -, loanable funds theory seems more appropriate for LLBs during this era. It has not been possible to control for GDP in this case though. The lack of significant long-run coefficients along with barely significant IRFs particularly for the Statist regime may be an indication of the strong influence of various regulations on the credit market.
It is notable that during the Market regime in -, the evidence speaks for the endogenous view when only deposits and credit are considered. However, when credit and deposits with both banks and mortgage institutions are more realistically included from , along with bonds from the same, the results indicate that deposits become less important both as a source and as a result of credit. Bonds, especially covered bonds, became more important for creditors as a source of funding, and as the general public increasingly turned to mutual funds, deposits lost significance as a vehicle for savings.
Even so, some historical events still speak for the endogenous view. During the Deregulation and Market regime periods, banks were bailed out both during the crisis of the early s and in -. Arguably, this reduced the perceived market risks for banks and effectively lowered their funding costs, in turn lowering customer interest rates and raising demand for loans with the general public. Furthermore, deregulation liberalised bank balance sheets. Their managements were freed from reserve requirements, capital controls and other government interference and became instead subject to financial innovation and internationalisation, in the way described by Chick (, pp. -).
The evolutionary approach applied by Chick (, pp. -) to the British monetary system is in this study tested on the case of Sweden since . Overall, the results of this study do not support the theory that a monetary system with private commercial banks may evolve from exogenous money creation, where deposits give rise to credit, to endogenous money creation, where credit extended by banks creates deposits. Rather, the evidence suggests that even if there is somewhat more support for the endogenous money view, the interaction between credit and deposits has in general been almost impossible to identify as either endogenous or exogenous during most regulatory regimes in Sweden since the inception of a modern banking system in the s. Moreover, both theories often hold validity simultaneously. The evidence is thus far from unanimous, and should be treated with a healthy grain of salt, given the flaws in the sources and in the methodology. Even so, the results may provide non-trivial guidance as to how deposits and credit have interacted over the long run in Swedish commercial banking history.