Political Economy of Financial Regulation

Project Start: 01/2019
Status: Completed
Researchers: Rainer Haselmann, Shikhar Singla, Vikrant Vig
Category: Financial Intermediation
Funded by: LOEWE

Topic & Objectives

 

 

 

 

 

 

 

 

 

 

 

In this project, we study the decision making of financial regulators in an international standard setting. Since the introduction of the Basel Accord, regulators negotiate harmonized rules that most economies around the world incorporate into their national law. We have started to construct a unique dataset containing the positions of banks and regulators regarding the most important issues of Basel II and III. Further, we aim to apply texture analysis to evaluate the tone of regulators' speeches around certain events. We further want to examine the watering down of important issues negotiated in the Basel II/III frameworks.

Key Findings

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    Even though the initial data set shows an interesting pattern, the small sample size limits the number of issues discussed in Basel regulation and it is not possible to simply extend this data set.

  • One potential path forward would be to focus on new methodologies such as texture analysis.
  • To pursue the research question, it needs more new data collection and funding than initially expected and a review of methodologies.

 

 

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