The International Politics of Harmonization: The Case of Capital Market Regulation

By B. A. Simmons. International Organization, 2001

373 citations recorded by the source corpus.

The internationalization and globalization of capital markets greatly complicates the tasks of national financial regulators. It is becoming increasingly difficult, if not impossible, to regulate the activities of banking and securities firms and the broad range of transactions in which they engage on a national level. In this article I explore the process of international regulatory harmonization in capital markets, focusing especially on the mechanisms (political pressure, market pressure, and institutional arrangements) that facilitate this process. I argue that the United States and the United Kingdom are dominant players in the capital market and that the factors most relevant for understanding harmonization processes are (1) whether other jurisdictions have incentives to emulate the regulatory innovations of the dominant financial centers, and (2) whether the dominant centers experience negative externalities in the process. These two factors shed considerable light on whether harmonization will be spurred primarily by market forces or by politics; they also suggest the likely role of international institutions in the process of regulatory harmonization. The argument is illustrated using four issue areas: capital adequacy requirements for banks, anti-money laundering rules, accounting standards, and information sharing among securities regulators.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/91502d7fecfba64c5f3c26a378c705d5d67dd33f

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Citations in the corpus

Club governance and the making of global financial rules (2015, background): “They have also explained the role of the hegemon (Simmons, 2001) or why states may prefer existing club-like governance arrangements for banking regulation over extending the mandate of more formal international organizations with universal membership (Drezner, 2007).”
Making global markets: Historical institutionalism in international political economy (2010, background): “Often, however, states or other actors employ alternative strategies, including the extraterritorial application of national law (Devuyst, 2001; Simmons, 2001; Young, 2003), transgovernmental cooperation among regulators (Slaughter, 2004; Singer, 2004; Damro, 2006; Newman, 2008b), and indirect…”
Capital Rules: The Domestic Politics of International Regulatory Harmonization (2004, background): “Banks and securities firms are in the business of taking risks+ Banks lend money directly to businesses, governments, and individuals, thereby incurringcredit risk: the risk that borrowers will fail to repay their loans+ Securities firms underwrite new issues of marketable securities, serve as marke”
Targeted Sanctions in a World of Global Finance (2015, background): “The threat of targeted financial sanctions was also useful in coercing countries into changing their anti-money-laundering rules (Drezner 2007; Simmons 2001).”
Organizations, Regulation, and Economic Behavior: Regulatory Dynamics and Forms from the Nineteenth to Twenty-First Century (2008, background): “The California effect appears to depend on whether harmonized stringency is compatible with the interests of powerful governments (Drezner 2007, Simmons 2003), whether international organizations or collectivities of nations have the capacity to exclude laggards from lucrative markets (DeSombre…”
Globalization, harmonization, and competition: the different pathways to policy convergence (2005, background): “There is a burgeoning literature that discusses how states determine the pattern of transnational regulation (Vogel 1995; Simmons 2001; Mattli 2001; Koremenos et al. 2001).”
The European regulatory state and global public policy: micro-institutions, macro-influence (2007, background): “Regulators that lack such powers have a diminished ability to export their domestic regulation because in the absence of coercive threats, foreign jurisdictions often have few incentives to adjust (Simmons 2001).”
The Global Diffusion of Public Policies: Social Construction, Coercion, Competition or Learning? (2007, background): “Simmons (2001), for instance, shows that policies regulating money laundering are not subject to the logic of coordination.”
Making Rules for Global Finance: Transatlantic Regulatory Cooperation at the Turn of the Millennium (2009, background): “…of financial power changed+ 76+ See Risse 2000; and Farrell 2003+ 77+ See Sobel 1994; Oatley and Nabors 1998; Simmons 2001; and Singer 2007+ Exceptions include Coleman and Underhill 1995; and Cerny 1993+ 78+ Singer 2007+ 79+ Simmons 2001+ 80+ Ibid+, 592– 601+ 81+ See Keohane 1984; and Stein 1983+”