The global deregulation hypothesis

Abstract

The growth of the American financial services remains a bit of a puzzle. The standard approach, the deregulation hypothesis, posits that the industry expanded in response to national deregulation. Yet, when viewed in a comparative context, US finance was deregulated significantly less than other national financial systems and yet grew significantly more than most. We propose the global deregulation hypothesis as a solution to this puzzle. The hypothesis posits that American finance grew in response to deregulation in Europe and the emerging market economies. The article develops two theoretical mechanisms that link global deregulation to US financialization. It reports statistical tests that support two central implications of the global deregulation hypothesis. First, global deregulation is positively associated with the growth of US financial services, while US deregulation is not. Second, global deregulation is not systematically related to the growth of financial services in other industrial democracies.

Asset Manager Capitalism as a Corporate Governance Regime

“…The ease with which the latter goal has recently been abandoned supports the view that the investment chain is, in fact, prone to dramatic regime shifts. Moreover, in a globalized financial system, the investment chain in any individual country -and thus its corporate governance regime -is also a function of the organization and regulation of savings in the rest of the world (Oatley & Petrova 2020). This holds both ways -40 per cent of BlackRock's assets are managed for clients outside of the United States (BlackRock 2019a: 1), while…”

Asset Manager Capitalism as a Corporate Governance Regime

“…The ease with which the latter goal has recently been abandoned supports the view that the investment chain is, in fact, prone to dramatic regime shifts. Moreover, in a globalized financial system, the investment chain in any individual country -and thus its corporate governance regime -is also a function of the organization and regulation of savings in the rest of the world (Oatley et al 2020). This holds both ways -40 per cent of BlackRock's assets are managed for clients outside of the United States (BlackRock 2019a: 1), while BlackRock is also a shareholder in thousands of non-U.S. firms across the globe.…”

The three phases of financial power: Leverage, infrastructure, and enforcement

“…From this interdisciplinary literature emerge three foundational insights that underpin our analysis of the political economy of financial claims. First, around the world, the size of the financial sector has massively increased over the past half century (Oatley and Petrova, 2020).…”