The Political Economy of Financial Market Regulation

The Political Economy of Financial Market Regulation

The Dynamics of Inclusion and Exclusion

Edited by Peter Mooslechner, Helene Schuberth and Beat Weber

This book focuses on recent financial market reforms, and their implications for social, economic and political exclusion. In particular it considers the hitherto under-researched question of whose interests govern the design of regulatory mechanisms and who influences the decision-making process. This process is set out as contested terrain, in which there are winners and losers, and in which there are inevitably circles of exclusion. The authors, comprising financial authority experts and academic specialists, expand the concept of exclusion beyond its typical social dimension to incorporate all actors, be they individuals or institutions not permitted to contribute to financial market regulation as a public good. As they point out, this may take the form of political, economic or indeed cultural exclusion. The book examines the conflicts that arise between various interests and how these are managed within the process of regulation.


Peter Mooslechner, Helene Schuberth and Beat Weber

Subjects: economics and finance, financial economics and regulation, political economy, politics and public policy, political economy


At an international workshop organized at the Oesterreichische Nationalbank (OeNB) in the fall of 2004, a team of international academics and OeNB practitioners in financial market regulation were discussing recent regulatory reforms in financial governance. While central bankers when investigating the impact of financial market regulation typically analyse issues of economic efficiency in terms of monetary and financial stability, the workshop, by integrating insights from financial economics, political science and sociology, introduced a novel notion into the discussion on regulatory reform. The workshop participants investigated the dynamics of inclusion and exclusion in recent regulatory reform processes, such as Basel II, the Lamfalussy process, pension reforms, the proliferation of financial literacy programs and the deregulation of derivatives markets. Based on the papers presented at the workshop the authors of this book analyse the process of designing financial governance as contested terrain. The resulting institutional set up involves inclusion and exclusion. In the economic area, exclusion means not to be able (or at least being severely restricted) to participate in overall welfare of society. In the political area, for instance in the area of financial regulation, exclusion refers to affected groups that are not permitted to contribute effectively to financial market regulation. This fact has important consequences for processes of inclusion and exclusion more broadly. The contributions in this volume show that major parts of society who are affected by regulatory reform are excluded under current governance arrangements. As financial governance does not only affect the financial sphere but has wide impact...