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Banking union under construction: The impact of foreign ownership and domestic bank internationalization on European Union member-states' regulatory preferences in banking supervision

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  • Aneta B. Spendzharova

Abstract

What is the optimal scope of regulatory harmonization in European financial sector governance? I argue that the levels of foreign ownership and domestic bank internationalization are important determinants of the extent to which governments are prepared to endorse European solutions in banking supervision or prefer national ones. I test two hypotheses about the impact of foreign ownership and domestic bank internationalization on regulatory preferences. This article shows that being a host jurisdiction to foreign financial institutions constrains states' ability to steer credit flows and tackle perceived threats to national financial stability. As a consequence, decision-makers seek to preserve some national regulatory autonomy. Especially during economic downturns, national supervisory authorities have strong incentives to pursue policies that minimize losses for domestic stakeholders and shift burdens onto foreign ones.

Suggested Citation

  • Aneta B. Spendzharova, 2014. "Banking union under construction: The impact of foreign ownership and domestic bank internationalization on European Union member-states' regulatory preferences in banking supervision," Review of International Political Economy, Taylor & Francis Journals, vol. 21(4), pages 949-979, August.
    • Handle: RePEc:taf:rripxx:v:21:y:2014:i:4:p:949-979
    DOI: 10.1080/09692290.2013.828648
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    Cited by:

    1. Schuknecht, Ludger & Siegerink, Vincent, 2020. "The political economy of the G20 agenda on financial regulation," European Journal of Political Economy, Elsevier, vol. 65(C).
    2. Anna-Lena Högenauer, 2021. "Scrutiny or Complacency? Banking Union in the Bundestag and the Assemblée Nationale," Politics and Governance, Cogitatio Press, vol. 9(2), pages 219-229.
    3. Lindner, Vincent & Eckert, Sandra & Nölke, Andreas, 2022. "Political science research on the reasons for the (non) adoption and (non) implementation of EMU reform proposals: The state of the art," SAFE Working Paper Series 339, Leibniz Institute for Financial Research SAFE.
    4. David Howarth & Lucia Quaglia, 2015. "The political economy of the euro area's sovereign debt crisis: introduction to the special issue of the Review of International Political Economy," Review of International Political Economy, Taylor & Francis Journals, vol. 22(3), pages 457-484, June.
    5. Lucia Quaglia & Aneta Spendzharova, 2017. "The Conundrum of Solving ‘Too Big to Fail’ in the European Union: Supranationalization at Different Speeds," Journal of Common Market Studies, Wiley Blackwell, vol. 55(5), pages 1110-1126, September.
    6. Mario Tümmler, 2022. "Completing Banking Union? The Role of National Deposit Guarantee Schemes in Shifting Member States' Preferences on the European Deposit Insurance Scheme," Journal of Common Market Studies, Wiley Blackwell, vol. 60(6), pages 1556-1572, November.
    7. Ioannis Asimakopoulos & David Howarth, 2022. "Stillborn Banking Union: Explaining Ineffective European Union Bank Resolution Rules," Journal of Common Market Studies, Wiley Blackwell, vol. 60(2), pages 264-282, March.
    8. Mérő, Katalin, 2019. "Érdemes-e csatlakozniuk az európai bankunióhoz az euróövezeten kívüli tagállamoknak? [Is it worth non-euro member-states joining the European Banking Union?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 497-520.

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