Gesture Politics?: explaining financial regulatory reform in the European Union

We accept the insights from several distinct analytical approaches to
explain national policy-making and EU-level policy. We apply systemic
realism and an approach focused upon interest group preferences. We also
accept the usefulness of insights drawn from comparative political economy
(CPE). We agree with CPE approaches to the extent that they insist that
government policies seek to protect national political economies (as in
Quaglia, forthcoming). However, we also warn against a CPE approach that
relies upon a stagnant understanding of Varieties of Capitalism (VoC) (Hall
and Soskice, 2001) because such an approach ignores significant changes that
have taken place in European financial systems and capitalisms over the past
decade (Hancké et al., 2007). We argue that to understand fully the lack of
developments on banking regulation at the EU level and EU-level policy
co-ordination on international regulation, it is necessary to incorporate other
insights, notably from international policy economy (IPE), into an understanding
of how national financial systems and economic interests shape
national policy. We cannot divorce this study of EU-level responses to the
financial crisis from considerations of the obstacles facing financial market
integration in the EU. Clearly, support for integration shaped national policymaking
on EU-level developments on financial sector matters. However, we
argue that integration considerations were secondary. Our focus upon the
Member States with the three largest economies and financial sectors –
Germany, France and the UK – and the influence of the positions of the
financial interests in these countries corresponds to a Liberal Intergovernmentalist
(LI) analysis. However, we do not seek to draw broader conclusions
about the applicability of LI to explain developments in this policy area.