Leveraged interests: Financial industry power and the role of private sector coalitions

Abstract

ABSTRACTThe power of financial industry groups is a subject of widespread academic and public debate. Existing international political economy (IPE) research has highlighted how different resources, institutions and structural features allow financial industry groups to influence financial regulatory policymaking. In so doing, however, this literature routinely tends to neglect the wider array of interest groups beyond the particular financial industry groups being regulated. Actor plurality is usually assumed to be low or inconsequential. Such an assumption obscures the important role that actor plurality may play in the policymaking process. We present new quantitative and qualitative evidence demonstrating how global financial regulatory politics is more plural than most existing depictions would suggest. Actor plurality can have significant effects in ‘leveraging’ the influence of financial industry groups, which are often able to tie in their interests with those of other private sector groups affected indirectly by the regulation in question. We illustrate this underappreciated facet of financial industry power through a variety of case-based evidence from the formation of banking and derivatives rules in various jurisdictions, both before and after the global financial crisis of 2008–10.