Abstract

PurposeThe purpose of this paper is to document Canadian financial services regulatory reform, illustrating how existing institutional fragmentation has undermined capacity to effectively learn from the global financial crisis.Design/methodology/approachThe paper draws on government documents, public comments and interviews with key individuals in the reform process to document the different institutional responses to the crisis.FindingsThe case highlights concerns raised in the policy subsystems literature that the capacity for “learning”, even from events as significant as the financial crisis, can be undermined by poor institutional arrangements which create incentives for policymakers to support self interested and limited analysis.Practical implicationsThe case suggests that effective learning in a complex sector requires that there be a national regulator charged with broad independent analytical responsibilities to ensure that the industry is effectively regulated. Existing fragmentation of responsibilities, combined with the interests of the industry and the current government in deflecting new regulatory rules, has meant that existing government expertise has not been effectively deployed.Originality/valueThe paper offers an important corrective to the existing view of Canadian financial regulation and is a compelling illustration of how poor institutional arrangements and ambiguous jurisdictional responsibilities can impede effective policy capacity in relation to learning.

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