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The Political Economy of Financial Market Regulation

The Dynamics of Inclusion and Exclusion Edited by Peter Mooslechner, formerly Oesterreichische Nationalbank, Helene Schuberth, Head of Division and Beat Weber, Oesterreichische Nationalbank, Austria
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.
Extent: 288 pp
Hardback Price: $136.00 Web: $122.40
Publication Date: 2006
ISBN: 978 1 84542 518 0
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  • Economics and Finance
  • Financial Economics and Regulation
  • Political Economy
  • Politics and Public Policy
  • Political Economy
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.

The book has a focus on political financial sector reforms at the
global level with special emphasis on how these reforms are implemented
in the EU. The authors conclude that financial governance has to be
embedded in broad legitimization structures, encompassing the
participation or representation of a variety of interests affected by
it, if they are to be deemed democratically legitimate. Furthermore,
inclusion also has to show substantive effects on governance outcomes.

This volume opens up the debate about the future of financial market
regulation and hence, policy makers, NGOs, researchers and scholars will
find this interdisciplinary book of great interest. It will also appeal
to political scientists, economists, financial market participants,
regulators and economic policy makers in general and academics of
sociology, political science, economics and finance in particular.
‘This is the best book I have yet seen on the social and political implications of financial market liberalisation and regulatory change in a globalizing world. The authors systematically analyse the relationships between powerful private sector actors, policymakers and regulators, and other interested groups, identifying crucial neopluralist coalition-building processes leading to complex pro-market forms of reregulation. Each chapter examines these processes at several levels: competing actors and institutions in the financial sector itself; wider political processes and power relationships; and distributive outcomes – or who wins and who loses in the multi-level playing field of 21st century global finance.’
– Philip G. Cerny, Rutgers University, Newark, US and University of Manchester, UK

‘This book is a collection of excellent contributions covering a broad range of perspectives for the future of financial regulation. Far from juxtaposing the pros and cons of the different approaches to regulation in a reductionist manner, it thoroughly explores the economic, political and social consequences of regulation on the basis of numerous case studies, e.g. of the Lamfalussy process, Basel II, the regulation of pension funds or the implementation of financial literacy programmes. The great value of this book lies in its comprehensive approach: it brings together academics and central bankers, thus synthesizing theoretical and practical knowledge about financial market regulation and presenting an informed debate on these issues for a broader readership.’
– Gertrude Tumpel-Gugerell, Executive Board of the European Central Bank

‘This book on financial governance is a highly timely contribution to economic discourse. The dynamics of inclusion and exclusion are highlighted from several angles – financial economics, political science and sociology. The rare insights presented are combined to produce a fresh approach to regulatory reform and financial governance. This book covers an exceedingly broad range of perspectives, as it contains contributions by academics and practitioners, economists and political economy experts. It is a must for everyone whose activities touch on financial market regulation issues.’
– Philip Arestis, University of Cambridge, UK

‘This is an excellent and thought provoking set of essays on the political dynamics of financial regulatory regimes, which uses the dichotomy of inclusion and exclusion to explore the issue of legitimacy of regulatory actors, and provides a welcome antidote to the technocratic and legal literature in the area.’
– Julia Black, London School of Economics and Political Science, UK

‘In this very nice volume reputed academics and central bankers discuss recent regulatory reforms in financial governance from a political economy perspective. Therefore it is invaluable for both policymakers and scholars interested in financial governance and market regulation.’
– Sylvester C.W. Eijffinger, Tilburg University, The Netherlands, Centre for Economic Policy Research, UK and CESifo Research Network, Munich, Germany
Contributors: S. Lütz, P. Mooslechner, T. Porter, V. Redak, S.W. Schmitz, H. Schuberth, M. Schürz, E. Tsingou, G.R.D. Underhill, B. Unger, B. Weber
Contents:

Preface
Peter Mooslechner, Helene Schuberth and Beat Weber

Financial Market Regulation and the Dynamics of Inclusion and Exclusion
Peter Mooslechner, Helene Schuberth and Beat Weber

PART I: THE THEORY OF FINANCIAL MARKET GOVERNANCE AND THE PROBLEM OF INCLUSION AND EXCLUSION
1. Theorizing Governance in a Global Financial System
Geoffrey R.D. Underhill

2. Political Economy Approach to Financial Reform
Susanne Lütz

3. Who Governs? Economic Governance Mechanisms and Financial Market Regulation
Brigitte Unger

PART II: CASE STUDIES
4. The Significance of Changes in Private-Sector Associational Activity in Global Finance for the Problem of Inclusion and Exclusion
Tony Porter

5. The Construction of the Single Market in Financial Services and the Politics of Inclusion and Exclusion
Beat Weber

6. Financial Education for the Poor in the United States
Martin Schürz

7. The Governance of OTC Derivatives Markets
Eleni Tsingou

8. Risks, Ratings and Regulation: Toward a Reorganization of Credit via Basel II?
Vanessa Redak

9. The Governance of Occupational Pension Funds and its Politico-Economic Implications: The Case of Austria
Stefan W. Schmitz

Index