Doctoral Dissertation Research: The Causes of Divergent Banking Regulation, 1988-2006

Harvard University, Cambridge MA

Investigators

Abstract

SES-1301627 PI: Frank Dobbin Co-PI: Kimberly Pernell Harvard University Intellectual Merit Over the past three decades, there has been notable international convergence in banking regulation. The scholarly attention to this regulatory convergence has downplayed important cross-national regulatory differences. However, cross-national variation in regulatory policy has influenced bank outcomes during the recent global financial crisis. Regulators from the G-10 countries did adhere to the same international regulatory standards (i.e. the Basel Capital Accords), but these standards were flexible and ambiguous, and national regulators interpreted and augmented them in different ways. The goal of this dissertation is to explain how and why national banking regulators made the divergent policy choices that they did. To this end, the researchers undertake a comparative historical analysis of the divergent development of banking regulation, 1988-2006, across three Basel Committee member countries: the U.S., Canada, and Spain. Archival material and interviews with domestic banking regulators are used to assess the relative influence of economic, political, institutional, and cultural explanations. This project will improve current understandings of regulatory policy development. Financial markets have grown increasingly salient in the global economy, and it is important to understand the factors that shape their regulation. This project also yields new insights into the deregulation of the U.S. financial system, through analyzing U.S. policy changes in comparative context. Broader Impacts The findings of this study are policy relevant. Particular regulations had serious implications for bank outcomes during the financial crisis, and greater knowledge of the factors that contribute to more or less effective regulation may help international and domestic regulators implement better policy in the future. These findings will also be broadly disseminated to interdisciplinary and non-academic audiences.