Bank Lobbying: Regulatory Capture and Beyond
Title | Bank Lobbying: Regulatory Capture and Beyond PDF eBook |
Author | Ms.Deniz O Igan |
Publisher | International Monetary Fund |
Pages | 30 |
Release | 2019-08-09 |
Genre | Business & Economics |
ISBN | 1484347544 |
In this paper, we discuss whether and how bank lobbying can lead to regulatory capture and have real consequences through an overview of the motivations behind bank lobbying and of recent empirical evidence on the subject. Overall, the findings are consistent with regulatory capture, which lessens the support for tighter rules and enforcement. This in turn allows riskier practices and worse economic outcomes. The evidence provides insights into how the rising political power of banks in the early 2000s propelled the financial system and the economy into crisis. While these findings should not be interpreted as a call for an outright ban of lobbying, they point in the direction of a need for rethinking the framework governing interactions between regulators and banks. Enhanced transparency of regulatory decisions as well as strenghtened checks and balances within the decision-making process would go in this direction.
Bank Lobbying: Regulatory Capture and Beyond
Title | Bank Lobbying: Regulatory Capture and Beyond PDF eBook |
Author | Ms.Deniz O Igan |
Publisher | International Monetary Fund |
Pages | 30 |
Release | 2019-08-09 |
Genre | Business & Economics |
ISBN | 1513511238 |
In this paper, we discuss whether and how bank lobbying can lead to regulatory capture and have real consequences through an overview of the motivations behind bank lobbying and of recent empirical evidence on the subject. Overall, the findings are consistent with regulatory capture, which lessens the support for tighter rules and enforcement. This in turn allows riskier practices and worse economic outcomes. The evidence provides insights into how the rising political power of banks in the early 2000s propelled the financial system and the economy into crisis. While these findings should not be interpreted as a call for an outright ban of lobbying, they point in the direction of a need for rethinking the framework governing interactions between regulators and banks. Enhanced transparency of regulatory decisions as well as strenghtened checks and balances within the decision-making process would go in this direction.
Lobbying on Regulatory Enforcement Actions
Title | Lobbying on Regulatory Enforcement Actions PDF eBook |
Author | Thomas Lambert |
Publisher | |
Pages | 57 |
Release | 2019 |
Genre | |
ISBN |
This paper analyzes the relationship between bank lobbying and supervisory decisions of regulators, and documents its moral hazard implications. Exploiting bank-level information on the universe of commercial and savings banks in the United States, I find that regulators are 44.7 percent less likely to initiate enforcement actions against lobbying banks. This result is robust across measures of lobbying, and accounts for endogeneity concerns by employing instrumental variables strategies. In addition, I show that lobbying banks are riskier and reliably underperform their non-lobbying peers. Overall, these results appear rather inconsistent with an information-based explanation of bank lobbying, but consistent with the theory of regulatory capture.
The Political Economy of Financial Regulation
Title | The Political Economy of Financial Regulation PDF eBook |
Author | Emilios Avgouleas |
Publisher | Cambridge University Press |
Pages | 531 |
Release | 2019-01-31 |
Genre | Business & Economics |
ISBN | 110847036X |
Examines the law and policy of financial regulation using a combination of conceptual analysis and strong empirical research.
Preventing Regulatory Capture
Title | Preventing Regulatory Capture PDF eBook |
Author | Daniel Carpenter |
Publisher | Cambridge University Press |
Pages | 531 |
Release | 2013-10-21 |
Genre | Political Science |
ISBN | 1107512522 |
When regulations (or lack thereof) seem to detract from the common good, critics often point to regulatory capture as a culprit. In some academic and policy circles it seems to have assumed the status of an immutable law. Yet for all the ink spilled describing and decrying capture, the concept remains difficult to nail down in practice. Is capture truly as powerful and unpreventable as the informed consensus seems to suggest? This edited volume brings together seventeen scholars from across the social sciences to address this question. Their work shows that capture is often misdiagnosed and may in fact be preventable and manageable. Focusing on the goal of prevention, the volume advances a more rigorous and empirical standard for diagnosing and measuring capture, paving the way for new lines of academic inquiry and more precise and nuanced reform.
Regulatory Capture in Banking
Title | Regulatory Capture in Banking PDF eBook |
Author | Daniel C. L. Hardy |
Publisher | INTERNATIONAL MONETARY FUND |
Pages | 25 |
Release | 2006-01-01 |
Genre | |
ISBN | 9781451862942 |
Banks will want to influence the bank regulator to favor their interests, and they typically have the means to do so. It is shown that such "regulatory capture" in banking does not imply ineffectual regulation; a "captured" regulator may impose very tight, costly prudential requirements to reduce negative spillovers of risk-taking by weaker banks. In these circumstances, differences in the regulatory regime across jurisdictions may persist because each adapts its regulations to suit its dominant incumbent institutions.
A Fistful of Dollars
Title | A Fistful of Dollars PDF eBook |
Author | Mr.Thierry Tressel |
Publisher | International Monetary Fund |
Pages | 72 |
Release | 2009-12-01 |
Genre | Business & Economics |
ISBN | 1451874324 |
Using detailed information on lobbying and mortgage lending activities, we find that lenders lobbying more on issues related to mortgage lending (i) had higher loan-to-income ratios, (ii) securitized more intensively, and (iii) had faster growing portfolios. Ex-post, delinquency rates are higher in areas where lobbyist' lending grew faster and they experienced negative abnormal stock returns during key crisis events. The findings are robust to (i) falsification tests using lobbying on issues unrelated to mortgage lending, (ii) a difference-in-difference approach based on state-level laws, and (iii) instrumental variables strategies. These results show that lobbying lenders engage in riskier lending.