Bank Lobbying: Regulatory Capture and Beyond

August 9, 2019

Preview Citation

Format: Chicago

Deniz O Igan, and Thomas Lambert. Bank Lobbying: Regulatory Capture and Beyond, (USA: International Monetary Fund, 2019) accessed November 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In this paper, we discuss whether and how bank lobbying can lead to regulatory capture and have real consequences through an overview of the motivations behind bank lobbying and of recent empirical evidence on the subject. Overall, the findings are consistent with regulatory capture, which lessens the support for tighter rules and enforcement. This in turn allows riskier practices and worse economic outcomes. The evidence provides insights into how the rising political power of banks in the early 2000s propelled the financial system and the economy into crisis. While these findings should not be interpreted as a call for an outright ban of lobbying, they point in the direction of a need for rethinking the framework governing interactions between regulators and banks. Enhanced transparency of regulatory decisions as well as strenghtened checks and balances within the decision-making process would go in this direction.

Subject: Banking, Deposit insurance, Economic sectors, Expenditure, Financial crises, Financial institutions, Financial sector, Global financial crisis of 2008-2009, Mortgages

Keywords: Bank lobbying, Banks, Financial crises, Financial crisis, Financial sector, Global, Global financial crisis of 2008-2009, Lobbying, Lobbying agenda, Lobbying bank, Lobbying expenditure, Lobbying operation, Lobbying process, Mortgages, Political economy, Regulation, Regulatory capture, Supervision, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/171
Stock No:

WPIEA2019171
ISBN:

9781484347546
ISSN:

1018-5941

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