The Domestic Politics of Banking Regulation
This article seeks to ground financial regulatory choices in domestic politics. Based on evidence from twenty-two industrialized countries, we argue that electoral rules specifically, the extent to which they are centrifugal or centripetal have a significant effect on whether the banks or their consumers pay for the security of the banking system. Moreover, despite the homogenizing effects of global financial integration, the political dynamics generated by these electoral rules continue to shape the nature and extent of prudential regulations that countries adopt in the place of banking cartels.We are grateful to Kathy Bawn, Stephan Bub, Tim Clark, Scott Desposato, Geoff Garrett, Akinari Horii, Takeo Hoshi, Banri Kaeda, Susanne Luetz, Rieko McCarthy, Yoshimasa Nishimura, Thomas Oatley, Frank Packer, Marc Saidenberg, Michael Thies, Sei Nakai, and a number of other bankers and officials for helpful suggestions and comments. We thank Yoshiko Inoue, Stephen Kosack, Jana Kunicova, Jun Saito, Yuka Sumiya, Vineeta Yadav, and Mark Zimny for exceptional research assistance. Frances Rosenbluth thanks the Council on Foreign Relations for a fellowship to spend a year at the Federal Reserve Bank of New York (1999 2000). There were many people in the Bank whose help, of one kind or another, was indispensable. This article was presented at the 97th annual meeting of the American Political Science Association, held in San Francisco in September 2001. We thank B. Jerry Cohen, Louis Pauley, and other participants at our panel for helpful comments. We also thank IO editor Lisa Martin and two anonymous reviewers for guidance in improving the analytical focus of this paper.
Volume (Year): 57 (2003)
Issue (Month): 02 (March)
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