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.

Chapter 3: Who Governs? Economic Governance Mechanisms and Financial Market Regulation

Brigitte Unger

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


Brigitte Unger Who governs financial markets and financial market reforms? Which mechanisms are involved? And who plans or can be held responsible for the outcomes which ultimately not only affect the financial sector itself but also the real sector in the form of altered income distribution or changes in unemployment, to name but two examples? Outcomes that include or exclude the interests of different parts of society and increase or decrease the incomes and opportunities of various groups or individuals. The financial governance debate stemming from international relations (IR) and international political economy (IPE) has addressed these issues (for a survey, see Underhill in this volume). One advantage of this debate is that it analyzes the complexity of global financial aspects as well as the overlapping structures of multi-level and global financial governance. It analyzes regulatory reforms in specific financial sub-sectors and stresses the democracy deficits that might accompany the new forms of governance at the global level. However, the debate also has some deficiencies. In the following, three major weaknesses of the governance debate in general and of financial governance in particular will be addressed. First of all, the concept of governance is still vague. Section 1 thus gives a short overview of concepts of governance and shows that financial governance definitions have converged, but this has also reduced the richness of the original concept of economic governance. Today, every international agreement seems to have to do with some kind of network governance or private-sector governance. And every governance...

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