Global Governance and Regulatory Failure ― The Political Economy of Banking

Does global governance contribute to regulatory failure and financial crises? And, if yes, should we enhance global cooperation to prevent future crises or focus on the national level? The author reveals that, while the global cooperation of bank regulators should minimise the emergence of financial crises, it actually contributes to the build-up of financial bubbles and resulting turmoil. Underlying this regulatory failure is the transnational regulatory regime that substantially globalises the governance structure and policy process of regulating banks. It entrenches asymmetric influence in a manner that raises the possibilities of national and transnational firms to integrate their preferences into global regulatory standards, while at the same time decreasing the incentives for, and capacities of, politicians and regulators to protect the public good of systemic stability. Moreover, Roman Goldbach argues that the underlying governance structure remains intact to date, which promises comparable, future regulatory failure. The book provides both a theoretical framework of the global political economy of banking regulation and a detailed analysis of the policies and politics of the Basel Committee on Banking Supervision and its two most recent global standards of the Basel II and Basel III frameworks. Goldbach's innovative analysis, which integrates all actors and institutions of the global political economy and builds on new empirical material from national, transnational, and international processes, demonstrates how global governance has contributed to the onset of the Great Recession – and how it continues to increase the likelihood of future global financial crises.

Roman Goldbach is a researcher at the Department of Political Science of the University of Dresden, Germany. His research focuses on the policy implications of the globalization and financialization of political economies.