Convergence Within National Diversity: The Regulatory State in Finance 1
The international political economy literature often expects that states end up in regulatory races to the bottom while competing for the most mobile segments of capital. While multilateralism argues that states are able to overcome prisoner dilemma situations by converging on international standards of regulation, comparative historical institutionalists assume ongoing diversity of regulatory frameworks. The paper shows that reforms of banking regulation in the U.S., Britain and Germany exemplify a pattern of ‘convergence within national diversity’. It is argued that a combination of comparative institutionalism with a multilateral perspective captures the causes and patterns of regulatory reform in finance. While convergence on a certain ‘hegemonic regulatory model’ is due to intergovernmental coordination on the regime level, national diversity with respect to timing and the extent of regulatory change depends to a large extent on the existence or absence of institutional veto points in the domestic political system.
1 The paper summarizes findings of a broader research project on Globalization and the transformation of models of banking and capital market regulation in Germany, Britain and the U.S. The project was conducted at the Max-Planck-Institute for the Study of Societies in Cologne, Germany. Earlier versions of this paper were presented at the Annual meeting of the British International Studies Association in London, December 16–18, 2002 and at the FISC meeting at CEPREMAP in Paris, May 23–24, 2003. I am grateful to the participants of the discussion, to Phil Cerny, Jürgen Feick, Cornelia Woll and to the reviewers of JPP for helpful comments.