Working Paper: CEPR ID: DP3231
Authors: Marco Pagano; Paolo Volpin
Abstract: The regulations that shape the design and the operations of corporations, credit and securities markets differ vastly from country to country. In addition, similar regulations are often unequally enforced in different countries. Economists still have an imperfect understanding of why these international differences exist and of whether they tend to persist over time. A recent strand of research has shown that some progress on these issues can be made using the approach of the new political economy, which models regulation and its enforcement as the result of the balance of power between social and economic constituencies. In this Paper we offer a first assessment of the results and potential of this approach in three fields: corporate finance, banking and securities markets.
Keywords: bankruptcy law; corporate governance; credit market regulation; financial development; political economy; privatization; shareholder protection
JEL Codes: G28; G38; K22; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political interventions (D72) | flawed financial regulation (G28) |
| entrenched interests (P26) | inhibit regulatory change (L51) |
| political landscape (D72) | design of bankruptcy laws (K35) |