Timing as a source of regulatory influence: A technical elite network analysis of global finance

Abstract

Rules governing the international financial system are the subject of some of the most intense distributional battles waged in any area of global governance. Who wins and who loses such battles -and why? I develop a novel analytical framework -technical elite network (TEN) theory -which explains the widely varying levels of influence that stakeholders enjoy over global financial standards. TEN theory draws attention to how issue-specific characteristics of international finance -in particular, its highly technical and complex nature -shape the distributional consequences of global regulatory processes. It posits that such characteristics influence distributional outcomes by (i) affecting who claims first-mover position and, thus, sets the agenda in global financial rulemaking, and (ii) ensuring that proposals made by first movers are increasingly difficult to alter at later stages of rulemaking. I provide empirical evidence for the theory by examining two regulatory regimes that are central to the efficiency and stability of the global financial system: the Basel Committee on Banking Supervision and the International Accounting Standards Board.

The interest ecology of financial regulation: interest group plurality in the design of financial regulatory policies

“…One of our key findings is that the higher technical complexity of financial regulation is associated with lower interest group plurality. This finding thus supports the notion within the literature that technical complexity is a complementary aspect of financial industry power (McPhilemy, 2013;Lall, 2015;McCarty, 2013). In demonstrating the variability of mobilized dissent our findings complement recent interventions on the theme of regulatory capture and financial hegemony which suggest that finance has been subject to greater challenge since the global financial crisis (Kastner, 2014;Clapp & Helleiner, 2012;Pagliari & Young, 2014;Young, 2012;Helleiner & Thistlethwaite, 2013).…”

Asymmetric influence in global banking regulation

“…that transnationally active firms with substantial resources capture the regulatory process and dominate the rule-setting by advancing standards according to their preferences (Lall, 2014;Underhill and Zhang, 2008). This is likely to succeed, since the international banking industry has better access to the transgovernmental network than locally/nationally oriented counterparts, and shares a cross-national perspective as opposed to the rather limited domestic view.…”

“…Therefore, several studies have moved to the assessment of the politico-economic mechanisms of influence underlying such unfavorable outcomes. We know for some time the importance of resource-based influence and information asymmetries in augmenting the influence of transnational firms (Lall, 2014;Mattli and Woods, 2009). Recent contributions have added the relevance of global politico-economic opportunity structures, globalized policy processes, and coalition building.…”

Powering ideas through expertise: professionals in global tax battles

“…Conventional explanations tell us that the mighty are powerful in international financial governance because only they have the expertise and they are the first to set the standards (Lall 2014). However, we also know that often established financial groups are not well organized (Young 2014), and that coherent policy communities can fracture (Tsingou 2015).…”