Compliance forces, domestic policy process, and international regulatory standards: Compliance with Basel III

Abstract

This article contributes to our understanding of how and why developing countries would comply with international banking regulatory standards, Basel standards. The article demonstrates the interplay between opportunity structures constituted by transnationalization of public policymaking and domestic institutional setting, and how forces of compliance resonate in the domestic politics of compliance. The empirical findings are based on Turkey's compliance with Basel standards. It relies on fieldwork that involves semi-structured qualitative interviews with senior regulators and bankers, which are complemented with analysis of secondary data. The article shows that a capable and willing regulator could capitalize on the top-down policymaking style which restricts the regulatee's access to international negotiations, and sets the terms at the domestic level. Direct access to international negotiations, resource asymmetry in favor of the regulator, and superior “negotiation knowledge” helped the regulator pacify a critical, skeptical regulatee, and drive the compliance process. The article also shows that the compliance process takes place at three stages: policy formulation at the international level, an “interpretation stage” in between the international and the domestic levels, and finally the domestic policy process.

The Political Economic Sources of Policy Non-design, Policy Accumulation, and Decay in Policy Capacity

“…To begin with organizational policy capacity, while the CBRT's and BRSA's organizational policy capacity had been acknowledged previously given operational, analytical, and political capacities that were operationalized across different policy areas and contexts (Coban, 2020(Coban, , 2022, policy alienation among public officials through tactical powerlessness (i.e., bureaucrats being excluded from the policy process and becoming mere implementation agents of the executive) and societal meaninglessness (i.e., bureaucrats' perception of their service not adding social value) (Tummers et al, 2009;van Engen et al, 2019van Engen et al, , p. 1091) are observable. For example, a senior regulator mentions that this role has become a liability for me .…”

Policy capacities and effective policy design: a review

“…Analytical skills at the level of individual analysts and policy workers are key, and the ‘policy analytical capacity’ (Rayner et al, 2013 ; Wellstead et al, 2011 ) of government needs to be especially high to deal with complex quantitative economic and financial issues involved in regulating and steering the sector and preventing crises (Bakır & Çoban, 2019 ; Rayner et al, 2013 ; Woo et al, 2016 ). Similarly, undertaking policy design within legal systems of governance relying heavily on high levels of managerial capacities that can deter against diminishing returns of compliance or mounting non-compliance with government directives (Coban, 2020a ; May, 2005 ). Capacities at the systemic level can be especially critical in this case as governments find it difficult to enact traditional command-and-control instruments in the absence of overall public trust.…”

Coordinating monetary policy and macroprudential policy: Bureaucratic politics, regulatory intermediary, and bank lobbying

“…Being at the center of the financial system provides the basis of its structural power. Besides, the regulatory policy process takes place through an institutionalized exchange of information, feedback on regulation drafts, and even on various occasions coproduction of regulations (Coban, 2020a(Coban, , 2020b. Thus, the institutionalized role in the policy process attributes the primary source of the institutional power of the banking sector.…”