IDEAS home Printed from https://ideas.repec.org/a/wly/reggov/v15y2021i2p245-261.html
   My bibliography  Save this article

States' interests as limits to the power of finance: Regulatory reforms in early local government financialization in the US and UK

Author

Listed:
  • Christine Trampusch
  • Florian Fastenrath

Abstract

Through a comparison of typical and deviant cases, this study probes and refines the augmented power model which argues that the structural power of the financial industry fosters its instrumental power in influencing regulatory reforms under certain scope conditions. It shows the industry's success in influencing policymakers to authorize municipalities to use derivatives and thereby to financialize their debt management in the US (typical case). The failure of banks to acquire such a law in the UK (deviant case) reveals a hitherto little‐noticed condition under which this power explanation collapses: states' fiscal and monetary constitution. We demonstrate that analyzing the operation of finance power requires a precise consideration of how states' fiscal and monetary constitution structures governments' responses to financial industry's regulatory preferences. Moreover, we conclude that synthesizing business power research with literature on the mutual dependence between states and finance helps to explain patterns of state financialization.

Suggested Citation

  • Christine Trampusch & Florian Fastenrath, 2021. "States' interests as limits to the power of finance: Regulatory reforms in early local government financialization in the US and UK," Regulation & Governance, John Wiley & Sons, vol. 15(2), pages 245-261, April.
    • Handle: RePEc:wly:reggov:v:15:y:2021:i:2:p:245-261
    DOI: 10.1111/rego.12292
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rego.12292
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rego.12292?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Strange,Susan, 1996. "The Retreat of the State," Cambridge Books, Cambridge University Press, number 9780521564298, September.
    2. Sbragia, Alberta, 1986. "Capital Markets and Central–Local Politics in Britain," British Journal of Political Science, Cambridge University Press, vol. 16(3), pages 311-339, July.
    3. Strange,Susan, 1996. "The Retreat of the State," Cambridge Books, Cambridge University Press, number 9780521564403, September.
    4. Fairfield, Tasha, 2015. "Structural power in comparative political economy: perspectives from policy formulation in Latin America," Business and Politics, Cambridge University Press, vol. 17(3), pages 411-441, October.
    5. Michael Moran, 1991. "The Politics of the Financial Services Revolution," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37789-9, December.
    6. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521118590, September.
    7. Scott James & Lucia Quaglia, 2019. "Brexit, the City and the Contingent Power of Finance," New Political Economy, Taylor & Francis Journals, vol. 24(2), pages 258-271, March.
    8. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521134132, September.
    9. Pepper D. Culpepper & Raphael Reinke, 2014. "Structural Power and Bank Bailouts in the United Kingdom and the United States," Politics & Society, , vol. 42(4), pages 427-454, December.
    10. Kalyanpur, Nikhil & Newman, Abraham L., 2019. "Mobilizing Market Power: Jurisdictional Expansion as Economic Statecraft," International Organization, Cambridge University Press, vol. 73(1), pages 1-34, January.
    11. Florian Fastenrath & Michael Schwan & Christine Trampusch, 2017. "Where states and markets meet: the financialisation of sovereign debt management," New Political Economy, Taylor & Francis Journals, vol. 22(3), pages 273-293, May.
    12. Emmenegger, Patrick, 2015. "The long arm of justice: U.S. structural power and international banking," Business and Politics, Cambridge University Press, vol. 17(3), pages 473-493, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pritish Behuria, 2019. "The comparative political economy of plastic bag bans in East Africa: why implementation has varied in Rwanda, Kenya and Uganda," Global Development Institute Working Paper Series 372019, GDI, The University of Manchester.
    2. Armin Mertens & Christine Trampusch & Florian Fastenrath & Rebecca Wangemann, 2021. "The political economy of local government financialization and the role of policy diffusion," Regulation & Governance, John Wiley & Sons, vol. 15(2), pages 370-387, April.
    3. Culpepper Pepper D., 2015. "Structural power and political science in the post-crisis era," Business and Politics, De Gruyter, vol. 17(3), pages 391-409, October.
    4. Winecoff William Kindred, 2015. "Structural power and the global financial crisis: a network analytical approach," Business and Politics, De Gruyter, vol. 17(3), pages 495-525, October.
    5. Fairfield Tasha, 2015. "Structural power in comparative political economy: perspectives from policy formulation in Latin America," Business and Politics, De Gruyter, vol. 17(3), pages 411-441, October.
    6. Kevin Young & Stefano Pagliari, 2017. "Capital united? Business unity in regulatory politics and the special place of finance," Regulation & Governance, John Wiley & Sons, vol. 11(1), pages 3-23, March.
    7. Paster, Thomas, 2015. "Bringing power back in: A review of the literature on the role of business in welfare state politics," MPIfG Discussion Paper 15/3, Max Planck Institute for the Study of Societies.
    8. Lisa Kastner, 2017. "Business lobbying under salience," SciencePo Working papers Main hal-02187871, HAL.
    9. Emmenegger Patrick, 2015. "The long arm of justice: U.S. structural power and international banking," Business and Politics, De Gruyter, vol. 17(3), pages 473-493, October.
    10. Lisa Kastner, 2017. "Business lobbying under salience," Post-Print hal-02187871, HAL.
    11. Woll, Cornelia, 2015. "Politics in the interest of capital: A not-so-organized combat," MaxPo Discussion Paper Series 15/2, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
    12. Farrell Henry & Newman Abraham L., 2015. "Structuring power: business and authority beyond the nation state," Business and Politics, De Gruyter, vol. 17(3), pages 527-552, October.
    13. repec:hal:spmain:info:hdl:2441/6sio9gcc4m9nr96pqt3c5at95b is not listed on IDEAS
    14. Marsh David & Akram Sadiya & Birkett Holly, 2015. "The structural power of business: taking structure, agency and ideas seriously," Business and Politics, De Gruyter, vol. 17(3), pages 577-601, October.
    15. Abdelal Rawi, 2015. "The multinational firm and geopolitics: Europe, Russian energy, and power," Business and Politics, De Gruyter, vol. 17(3), pages 553-576, October.
    16. repec:spo:wpmain:info:hdl:2441/6sio9gcc4m9nr96pqt3c5at95b is not listed on IDEAS
    17. Scott James & Lucia Quaglia, 2023. "Epistemic contestation and interagency conflict: The challenge of regulating investment funds," Regulation & Governance, John Wiley & Sons, vol. 17(2), pages 346-362, April.
    18. Fairfield, Tasha, 2015. "Structural power in comparative political economy:perspectives from policy formulation in Latin America," LSE Research Online Documents on Economics 62123, London School of Economics and Political Science, LSE Library.
    19. Mark Beeson, 2003. "East Asia, The International Financial Institutions And Regional Regulatory Reform," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 8(3), pages 305-326.
    20. Arts, Bas, 2014. "Assessing forest governance from a ‘Triple G’ perspective: Government, governance, governmentality⁎⁎This article belongs to the Special Issue: Assessing Forest Governance," Forest Policy and Economics, Elsevier, vol. 49(C), pages 17-22.
    21. Keyan Lai, 2021. "National security and FDI policy ambiguity: A commentary," Journal of International Business Policy, Palgrave Macmillan, vol. 4(4), pages 496-505, December.
    22. Michele-Lee Moore & Frances R. Westley & Tim Brodhead, 2012. "Social Finance Intermediaries and Social Innovation," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 3(2), pages 184-205, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:reggov:v:15:y:2021:i:2:p:245-261. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1748-5991 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.