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

Abstract

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractExisting literature has offered a variety of claims regarding why financial regulatory politics features a relative dominance of the regulated financial industry. In this article we explore the broader interest group environment in which financial industry advocacy operates. Using new data on interest group participation in financial regulatory consultations, we provide the first comprehensive analysis of the ecology of interest groups that populate financial regulatory policymaking. Through a new measure of 'mobilized dissent' we find evidence that the level of interest group pluralism in financial regulatory policymaking is constrained by the limited mobilization of voices outside of the business community. We analyze how mobilized dissent toward the regulated financial industry changes in response to different institutional environments. While technical complexity, institutional context, and the global financial crisis are found to impact the level of mobilized dissent, the impact of these environmental conditions varies across different groups. This analysis reveals not only that organized opposition to the financial industry is relatively weak but also that it is relatively disjointed.

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“…Conceptualising 'politics as organised combat' (Hacker and Pierson, 2011), the literature on instrumental power emphasises organised interests, lobbying and regulatory capture. It shows that the financial sector's high levels of unity and organisation often bring favourable political outcomes (Pagliari and Young, 2016;Young and Pagliari, 2017). Since low issue salience and 'quiet' politics generally benefits business interests (Culpepper, 2010;Massoc, 2017;), civil society-based advocacy is most effective when it succeeds in making policy issues salient and 'noisy' -as it did, in some areas of financial policy, in the aftermath of the global financial crisis (Ziegler and Woolley, 2016;Baker and Wigan, 2017;Kastner, 2018).…”

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