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

Abstract

We tend to overlook the linkages between how policy coordination within bureaucracy is achieved and the nontrivial implications of policy coordination for business power over the policy process. This article addresses this gap by exploring macroprudential regulatory governance in Turkey. Drawing on elite interviews and written sources, the article argues that analytically and operationally more capable and politically endorsed central bank subordinated the autonomous bank regulator, as the latter assumed a de facto regulatory intermediary role between the former and the regulatee. Within this setting, the regulatee could not rely on its structural and institutional power for mobilization of instrumental power to contest and overturn macroprudential measures. The article contributes to our understanding of the conditions of policy coordination within bureaucracy, how de jure regulator could be subordinated as a de facto regulatory intermediary, and why influential business power needs both a politically and bureaucratically enabling setting.

Jurisdictional overlap: The juxtaposition of institutional independence and collaboration in police wrongdoing investigations

“…Almost all the interviewees—including the police—questioned why police management had to be in between the two de jure overseers since this reduced them to be de facto subsidiaries in the process of holding officers accountable (cf. Coban, 2021).…”

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 .…”

“…Put differently, dependence on the credit-led growth model, and a growth regime that positions the executive and constituency (i.e., business; non-financial corporations, NFCs, such as small-and-medium sized enterprises, export-oriented manufacturers, construction firms, and tourism) within clientelistic arrangements, prioritization of economic growth through lower interest rates and loose bank regulatory policy drove policy non-design. As the executive has not changed its course since then while insisting on haphazard response, such prolonged non-design in the face of a crisis juncture did not remain within the realm of instrument choices: it led to policy accumulation in terms of a rise in policy density and intensity, along with decay in organizational policy capacity within bureaucracy through policy alienation (Tummers et al, 2009;van Engen et al, 2019), as autonomous regulatory agency (Banking Regulation and Supervision Agency, BRSA) and monetary authority (Central Bank of the Republic of Turkey, CBRT) have faced non-trivial challenges to their autonomy and capabilities to rely on their previously acknowledged organizational capacities (Apaydin & Coban, 2022a, 2022bCoban, 2022). Furthermore, erosion in systemic policy capacity arose in the form of a decline in transparency, accountability, and lower trust in public organizations and the government.…”

Between technocracy and politics: How financial stability committees shape precautionary interventions in real estate markets

“…These FSCs differ markedly in their set‐ups, decision‐making procedures and powers, which range from the ability to calibrate tools, issue comply‐or‐explain recommendations, or publish non‐binding warnings (Lombardi & Moschella, 2017). A key rationale for FSC's is to coordinate policies among different supervisors, reflecting systemic risk's cross‐cutting nature (Coban, 2021; Edge & Liang, 2019). Importantly, however, they also ensure that the political side (often the Ministry of Finance, which itself is a hybrid technocratic‐political body) has a seat at the table.…”

“…Yet, whether the FSC's institutional configuration mattered for this outcome remains unanswered. Coban (2021) demonstrates how in the Turkish FSC, the central bank arm-twisted the banking supervisor into action. Somewhat surprisingly, an alliance between the political actor and the central bank within the FSC-based on the central bank's epistemic prowess and personal relationships between leading figures at the central bank and the treasury-contributes to macroprudential action, instead of feet dragging by the political actor (ibid., p. 9).…”