Global financial market regulation exhibits institutional variation across issue areas and sectors. For example, minimum capital requirements for banks are sponsored by the BCBS, a transgovernmental body of central bankers, while accounting principles are developed by a private body, the IASB. Some institutions, like the intergovernmental IMF promulgate (more) binding rules, while others, like the IASB rely on voluntary regulations. We ask: (1) which institutional designs can be distinguished? (2) How has institutional variation developed over time? (3) How can we explain the variance of institutional design?(1) We analyze two design features: (a) types of institutional actors, and (b) legalization. With respect to (a) we distinguish between public and private actors on the one hand and cabinet level (non-delegated) or independent/administrative (delegated) actors on the other, yielding four types of actor forms: intergovernmental, transgovernmental, transnational, and transnational public-private (PPP). With respect to (b) we focus on the hardness and softness of regulations.
(2) We develop a theoretically informed coding scheme to measure these two attributes, plus a number of institutional features of general interest and compile a new Design of Financial Governance Dataset (DEFIGOD) for all institutions of global financial regulation that can be identified at different points in time between the early 1960s and today. Based on this dataset the project systematically tests a number of relevant descriptive hypotheses.
(3) In order to explain the institutional design choices, we develop several hypotheses. Preliminary hypotheses include the following: (a) With respect to institutional type, we look at (i) economic power, (ii) institutional capacity of national regulatory bodies, (iii) resource dependence, and (iv) considerations of political opportunity. Concerning legalization, our hypotheses are based on (i) the severity of credible commitment problems, (ii) the severity of distributive conflict, (iii) power differentials among institutional designers and (iv) complexity of the respective issue area. On the basis of these hypotheses we develop conditions that can be linked to the two outcomes of interest. The analysis is carried out as a fuzzy-set QCA.
This project contributes to the literatures on “new modes of governance” and on legalization and extends them to the realm of global financial governance. Works in these areas have mostly been single case studies or focused on a small number of cases. In contrast, the project aims at a systematic empirical analysis on the basis of a large number of cases. Second, while a significant part of the IPE literature on global finance describes the shortcomings of international financial regulation, systematic analysis of the political determinants of these weaknesses is lacking, but is center-stage in this project and should be instrumental in any effort to re-regulate global finance.
Together with Lukas Hakelberg and Robert Gäde I am part of an international consortium, which investigates the causes and consequences of tax evasion and avoidance and seeks to redress these deficiencies of fiscal systems in the European Union. Our work package in Bamberg can be summarized as follows:
Between 2010 and 2014 a new global regime on the automatic exchange of account information emerged. Under the regime, most major tax havens report foreign account holders and their capital income to their respective home countries. This makes tax evasion a lot more difficult. As the new regime seems to put brakes on tax competition – the main reason for low taxes on capital income – we want to find out whether the downward trend in tax rates is coming to a halt or even reversing. Of course, many political and institutional factors are likely to mediate the impact of international cooperation on national tax rates. Hence, we assume that the decline in tax rates on capital income will only come to an end, if two things happen at the national level: (a) tax administrations in all countries need to fully implement the new regime’s information exchange provisions; and (b) tax policy makers need to exploit their new leeway and actually increase capital tax rates.
Against this background, we want to answer why tax policy and administrative change is transformative in some countries, but incremental or even absent in others? To this effect, we develop several hypotheses. With respect to administrative implementation, initial hypotheses are built around (i) the conflicting interests of high- and low tax countries, (ii) the institutional capacity of national administrations, (iii) and the diffusion of regulatory models among interdependent countries. With respect to tax policy changes, initial hypotheses focus on (i) partisan differences, (ii) countervailing pressures against capital interests coming from the electorate, and (iii) country size determining whether a jurisdiction tends to import or export capital.