Goodbye Neo-liberalism? Contested Policy Responses to Uncertain Consequences of the 2007–09 Financial Crisis

Pesendorfer, Dieter

doi:10.4337/9780857930453.00030

Cited by 4 publications

(2 citation statements)

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“…These institutions enforce 'data before market' regulations, often underpinned by risk assessments. While such regulation has been suggested for new products across the financial sector (Crotty and Epstein, 2009;Mullineux, 2010;Allen, 2013), there are no plans to systematically introduce this (Pesendorfer, 2012), and any developments are likely to be slow (O'Riordan and Cameron, 1994).…”

Section: Governance Of Financial Innovationmentioning

confidence: 99%

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Asante

Owen

Williamson

2014

Journal of Responsible Innovation

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We describe an ethnographic study within a global asset management company aimed at understanding the process and governance of new product development and perceptions of responsible innovation. We observed innovation to be incremental, with a clearly -structured stage gating model of governance involving numerous internal and external actors that was framed by regulation and co-ordinated by a small product development team. Responsible innovation was framed largely in terms of considering client needs when innovating and the understanding of operational, legal, regulatory and reputational risks. Staff perceived the company as having an inherently cautious culture, where the probability of bringing something destructive to market was perceived as being low. We conclude that the observed stage gating architecture offers considerable scope as a mechanism for systematic embedding of more broadly framed, emerging concepts of responsible innovation.Keywords: financial innovation; new product development; responsible innovation; governance; responsibility; stage gating 1. IntroductionIn this paper we investigate the process and governance of financial innovation and perceptions of responsible innovation in a global asset management company. This research sits within a broader goal to understand how theoretical concepts of responsible innovation emerging in science and technology studies and beyond (e.g., Owen et al, 2013;von Schomberg, 2013) might be framed and implemented in financial settings. To date there has been only little consideration of responsible innovation in finance (Armstrong et al, 2012;Muniesa and Lenglet, 2013) and almost no primary research.While the academic literature suggests some possible features of contemporary financial innovation, there have in fact been few documented accounts of either the process or governance of financial innovation in commercial organisations (Frame and White, 2004). We therefore elected to take a case study approach to our research. The paper is laid out as follows: We first briefly review the literature on financial innovation and its governance. We go on to describe in detail the process and governance of financial innovation in a global asset management company undertaking significant new product development. We then describe perceptions of responsible innovation in the company before finally discussing how established innovation governance approaches in this and other commercial organisations might be enlarged to embed a more broadlyframed responsible innovation approach. Financial Innovation and New Product DevelopmentInnovation in finance has a long history, at least as far back as 3000 BCE with the introduction in Mesopotamia of commodity money, early forms of banking, personal loans, interest and contingency claims (Allen and Gale, 1994;Goetzmann and Rouwenhorst, 2005;Allen and Yago, 2010). MacKenzie (2006) argues that financial innovation is a socio-technical phenomenon that has been shaped by modern economic theories of finance. Many authors (Llewellyn 1992;W...

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Section: Governance Of Financial Innovationmentioning

confidence: 99%

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Asante

Owen

Williamson

2014

Journal of Responsible Innovation

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“…The overall frustration with pre-crisis regulatory frameworks and the economic consequences following the 2007 heart attack of the international financial system had led many to hope that there is a unique opportunity for more radical demands and policies. 911 Indeed, when the financial crisis came upon Europe with all its force, the pro-market attitude and light-touch regulation defended by private equity managers ran counter to the political interests, which favoured a more stringent regulatory oversight. Furthermore, at the same time when the AIFMD was taking shape in Europe, other jurisdictions were developing their own frameworks in this space, such as the Dodd-Frank Act in the US and its novel regulation of private fund managers.…”

Section: Discussionmentioning

confidence: 99%

Regulatory reform of private equity : the AIFMD and its implications

Rajczewski¹

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Private equity has grown remarkably in the last 30 years. Given its rise to prominence, exceptional profitability and a more prolific and publicly visible buyout activity, regulation in the private equity space seemed inevitable. The 2007 global financial crisis furnished an opportunity to doubt the industry’s role and magnify the key concerns, providing momentum for calls to regulate the industry more aggressively. Ultimately, the regulatory change came from the Alternative Investment Fund Managers Directive (AIFMD), which has been described as one of the most rigorously debated and controversial pieces of financial regulation to ever emerge from the European Union (EU). The AIFMD is unique and unprecedented, yet there has been very little written about it in the context of private equity. Therefore, this thesis makes a contribution to this area of research by examining the implications of AIFMD for private equity and arguing that this EU Directive has a re-shaping effect on the industry that inevitably marks the end of the light-touch regulation in this area. Whilst the desire of policymakers to act and intervene decisively during market downturns is understandable, there is a risk that the response may not be appropriate and result in a crisis-induced over-reaction. This thesis demonstrates, amongst other things, that the AIFMD has created a particularly complex regulatory regime which for the hitherto unregulated or lightly regulated fund managers has had a significant effect in the EU and beyond. Examples of the most impactful provisions relate to authorisation, marketing, depositaries, acquisition of control, remuneration, and transparency and disclosure. The implication are wide-ranging, and there is a clear conflict between the opportunities (e.g. EU passport, AIFMD as a global brand) and threats (e.g. excessive compliance costs, exodus of fund managers from the EU), which depend on a firm’s size, domicile and the gap needed to be aligned between the pre- and post-AIFMD regime. Although there will be no stark triumph of one position over another in the assessment of the AIFMD until all of its elements are fully implemented, overall the impact of the Directive has been material, requiring substantial work to comply with (or adapt to) the requirements, which in some cases are not only particularly onerous and costly, but also a bit misguided, discouraging, or fairly irrelevant.

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The Debate About the Ethics of Money Pursuit

Byttebier¹

2017

Towards a New International Monetary Order

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Goodbye Neo-liberalism? Contested Policy Responses to Uncertain Consequences of the 2007–09 Financial Crisis

Cited by 4 publications

References 0 publications

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Regulatory reform of private equity : the AIFMD and its implications

The Debate About the Ethics of Money Pursuit

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