1. The Interest Ecology of Finance:
An Empirical Analysis
Kevin Young & Stefano Pagliari
UMass Amherst City University London
kevinlyoung@polsci.umass.edu Stefano.Pagliari.1@city.ac.uk

2. Purpose of the Paper: Interest
Groups and Financial Regulation
 Existing Literature
 Focus on financial industry
 Focus on selected policies, and institutional
contexts
 Qualitative methods, case study approaches
 „Population ecology‟ approaches to interest
groups (e.g. Gray & Lowery 1996)
 Mobilization is conditioned by the environments in
which interest groups find themselves and the
interaction among different interest groups in the
mobilization process
 Take a comprehensive account of the entire
population of interest groups, from 10,000 feet

3. What does financial
regulatory lobbying look like?
•H1: The more complex the financial regulation, the lower
interest group plurality.Complexity
•H2: Interest group plurality increases during times when
financial regulation is salientIssue Salience
•H3: The earlier in the policymaking process, the less plural the
interest groups involved.Stage in the policymaking
•H4: Regulatory policymaking by legislatures is associated with
more plurality than regulatory policymaking by bureaucracies.Policy venues
•H5: International regulatory policymaking will be associated
with less plurality than national regulatory policymaking.International policymaking
•H0a: The predominant stakeholders in financial regulation are
business groups
Business dominance
•H0b: Within the business community, the predominant stakeholders in
financial regulation are business groups from the regulated industry.Regulatory Capture
How plural is financial regulatory lobbying?
What environmental factors affect interest group plurality?

4. Mapping the Interest Group
Ecology of Finance
 Source: 13,189 comment letters in response to 291
different financial regulatory consultations
 Institutional venues
 National: US, UK, Canada, Germany, Switzerland,
Australia
 Regional: EU
 International: Basel Committee, IOSCO, FSB
 Period: 1999 to 2013
 Coding Procedure
 Mobilization: identity of groups who responds to
regulatory consultations (sector and industry)
 Preferences towards regulatory status quo

5. Business Dominance Hypothesis
 H0a: The predominant stakeholders in financial regulation are business groups

6. Regulatory Capture Hypothesis
 H0b: Within the business community, the predominant stakeholders in
financial regulation are business groups from the regulated industry.

7.  How systematically do different categories of
groups appear, under different environmental
conditions?
 …multinomial logit (pr. of group occurring)
 …linear regression (proportion of group in mix)
 Cluster SE by policy consultation
 Control for size of consultation
 Matching where imbalance

8. Salience & the Financial Crisis
 H2: Interest group plurality increases during times
when financial regulation is salient

9. Stage in the Policymaking
Process
 H3: The earlier in the policymaking process, the
less plural the interest groups involved.

10. Technical Complexity
 H1: The more complex the financial regulation,
the lower interest group plurality.

11. Policy Venue: Legislative vs.
Bureaucracies
 H4: Regulatory policymaking by legislatures is associated with more
plurality than regulatory policymaking by bureaucracies.

12. Governance Level (National
vs. International)
 H5: International regulatory policymaking will be
associated with less plurality than national regulatory
policymaking.

13. What do they want? Analyzing
groups preferences
 Stratified random sample of 1271 response letter from 61 financial regulatory consultations
 Coding: 3 point scale (Yackee and Yackee 2006)
 Less stringency than the proposed regulation
 Support for proposed regulation
 More stringency than the proposed regulation
0
.2.4.6.8
Rest of Finance
Non-Financial Businesses
Labour Unions
Consumer
Research
NGOs
high/low mean
Solidarity with Regulated Financial Industry
.2.4.6.8
1
Rest of Finance
Non-Financial Businesses
Labour Unions
Consumer
Research
NGOs
high/low mean
Divergence with Regulated Financial Industry

15. Dissent with the financial
industry targeted for regulation

17. Conclusion
 Find evidence against the “unified dominance”
model of the financial industry (Porter and
McKeen-Edwards 2012)
 Plurality is a function of different conditions
 Technical complexity, salience make a difference,
but only for some groups and not others
 „Level‟ of policymaking and venue matter; stage
does not.
 The majority of „dissent‟ is likely to be found within
the business community, not outside it.