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See detailInternationalised banking, alternative banks and the Single Supervisory Mechanism
Howarth, David UL; Quaglia, Lucia

in West European Politics (2016), 39(3), 438-61

This paper sets out to explain the preferences of the seven northern euro area member states on the Single Supervisory Mechanism (SSM) concerning the threshold set for direct European Central Bank (ECB ... [more ▼]

This paper sets out to explain the preferences of the seven northern euro area member states on the Single Supervisory Mechanism (SSM) concerning the threshold set for direct European Central Bank (ECB) control over bank supervision. Building on the concept of the ‘financial trilemma’, it argues that different bank internationalisation patterns in the seven northern member states explain different preferences on the transfer of supervisory powers over less significant banks to the ECB. In particular, the reach of internationalisation into a national banking system – notably the extent to which even smaller banks were exposed to foreign banking operations – is shown to be the core factor explaining different national preferences on threshold. In the five countries with a large number of small and parochial alternative (cooperative and savings) banks, it is necessary to examine the system-specific structures of these banks to explain better the reach of internationalisation and national preferences on the threshold. Determined German opposition to ECB supervision of smaller alternative banks is juxtaposed with either less hostile or more positive support of at least four other countries despite the important presence of small alternative banks. [less ▲]

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See detailThe ‘ebb and flow’ of transatlantic regulatory cooperation in banking
Howarth, David UL; Quaglia, Lucia UL

in Journal of Banking Regulation (2016)

Do financial crises promote or hamper transatlantic regulatory cooperation in banking? This article argues that financial crises have an impact upon the alignment of regulatory preferences of the United ... [more ▼]

Do financial crises promote or hamper transatlantic regulatory cooperation in banking? This article argues that financial crises have an impact upon the alignment of regulatory preferences of the United States (US) and the European Union (EU), causing an ‘ebb and flow’ in transatlantic cooperation. When EU-US preferences are broadly aligned in periods of financial stability, transatlantic regulatory cooperation is intense. It is relatively easy for the EU and US to agree on market-friendly regulation promoted by banks. When preferences are different, especially in the context and aftermath of the exogenous shock of financial crises, transatlantic cooperation is more problematic because crises re-assert the importance of nationally embedded patterns of market organisation. [less ▲]

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See detailUnconventional Monetary Policies and the European Central Bank's Problematic Democratic Legitimacy
Högenauer, Anna-Lena UL; Howarth, David UL

in Zeitschrift für öffentliches Recht (2016), 71(2), 124

Prior to the international fi nancial crisis, the ECB’s policies were shaped by the interpretation that its mandate was primarily to ensure low infl ation. Since the outbreak of the sovereign debt crisis ... [more ▼]

Prior to the international fi nancial crisis, the ECB’s policies were shaped by the interpretation that its mandate was primarily to ensure low infl ation. Since the outbreak of the sovereign debt crisis in early 2010, the ECB has adopted a range of policies which have pushed its role well beyond that interpretation. This article presents the argument that ECB policy-making since the start of 2010 undermines the democratic legitimacy of the ECB. The problems stem from three developments: the stretching – and arguably breach – of the ECB’s mandate; the increasing politicization of the ECB’s decisions and policies; and the extent to which the ECB’s policies undermine the transparency of both its own monetary policy and national macroeconomic policies. [less ▲]

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See detailInflation aversion in the European Union: exploring the myth of a North–South divide
Howarth, David UL; Rommerskirchen, Charlotte

in Socio-Economic Review (2016)

Our study seeks to put the assumptions of German Stability Culture to the test. The concept is a core legitimizing element of economic policy discourse in Germany and used regularly to juxtapose Germany ... [more ▼]

Our study seeks to put the assumptions of German Stability Culture to the test. The concept is a core legitimizing element of economic policy discourse in Germany and used regularly to juxtapose Germany and northern Europe and the euro area periphery. Using Eurobarometer surveys we construct a measurement for Stability Culture which is based on the priority assigned to the fight against inflation. Our empirical analysis covers the 2002–2010 timespan and includes 27 European Union Member States. Our results show that the distinction between northern states with an allegedly strong and southern states with an allegedly weak Stability Culture is a myth. Controlling for actual inflation, we find that the northern Member States with an allegedly high Stability Culture are less concerned with price stability than the rest of the EU. [less ▲]

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See detailThe ComparativePoliticalEconomyofBaselIIIinEurope
Howarth, David UL; Quaglia, Lucia

in Policy and Society (2016), 35

The Basel III Accord was the centerpiece of the international regulatory response to the global financial crisis, setting new capital requirements for internationally active banks. This paper explains the ... [more ▼]

The Basel III Accord was the centerpiece of the international regulatory response to the global financial crisis, setting new capital requirements for internationally active banks. This paper explains the divergent preferences on Basel III of national regulators in three countries that approximate what are frequently presented as distinct varieties of capitalism in Europe — Germany, the United Kingdom and France. It is argued that national regulators setting post crisis capital requirements had to reconcile three inter-related and potentially conflicting objectives: banking sector stability, the competitiveness of national banks and short to medium term economic growth. The different national preferences on Basel III reflected how different national regulators defined and pursued these objectives, which in turn reflected the structure of national banking systems — specifically, systemic patterns of bank capital and bank-industry ties.     [less ▲]

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See detailInflation Aversion in the European Union: Exploring the Myth of a North-South Divide
Howarth, David UL; Rommerskirchen, Charlotte

E-print/Working paper (2015)

Our study seeks to prove that German Stability Culture is a myth. The concept is a core legitimizing element of economic policy discourse in Germany and used regularly to juxtapose Germany and northern ... [more ▼]

Our study seeks to prove that German Stability Culture is a myth. The concept is a core legitimizing element of economic policy discourse in Germany and used regularly to juxtapose Germany and northern Europe and the euro area periphery. Using Eurobarometer surveys we construct a measurement for Stability Culture which is based on the priority assigned to the fight against inflation. Our empirical analysis covers the 2002 to 2010 timespan and includes 27 European Union Member States. Our results show that the distinction between northern states with an allegedly strong and southern states with an allegedly weak Stability Culture is a myth. Controlling for actual inflation, we find that the northern Member States with an allegedly high Stability Culture are less concerned with price stability than the rest of the EU. [less ▲]

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See detailThe Comparative Political Economy of Basel III
Howarth, David UL; Quaglia, Lucia UL

E-print/Working paper (2015)

The Basel III Accord was the centerpiece of the international regulatory response to the global financial crisis, setting new capital requirements for internationally active banks. This paper explains the ... [more ▼]

The Basel III Accord was the centerpiece of the international regulatory response to the global financial crisis, setting new capital requirements for internationally active banks. This paper explains the divergent preferences on Basel III of national regulators in three countries that approximate what are frequently presented as distinct varieties of capitalism in Europe – Germany, the United Kingdom and France. It is argued that national regulators faced a ‘trilemma’ in setting capital requirements, having to prioritize among banking sector stability, the competitiveness of national banks and short to medium term economic growth. Different varieties of national financial system – specifically, banking system and different kinds of ‘banking champions’ – explain the different prioritization of objectives in the ‘trilemma’ and hence for the divergent preferences of national regulators on Basel III capital requirements. [less ▲]

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See detailThe political economy of the euro area's sovereign debt crisis
Howarth, David UL

in Review of International Political Economy (2015), 22(3), 457-484

This special issue has two main aims: to examine the contribution of political economy analyses of the sovereign debt crisis and to relate these findings to longstanding debates in the sub-disciplines of ... [more ▼]

This special issue has two main aims: to examine the contribution of political economy analyses of the sovereign debt crisis and to relate these findings to longstanding debates in the sub-disciplines of comparative political economy, international political economy and European economic governance. This introduction begins by reviewing the comparative political economy literature on national financial systems in order to account for the playing out of the crisis. It then examines the international political economy literature on the International Monetary Fund (IMF) and financial (sovereign debt) markets that played such a key role in the unfolding of the sovereign debt crisis. Finally, it outlines longstanding academic debates on the main ’asymmetries’; in European economic governance, and provides a critical overview of the three main policy and institutional reforms adopted by European Union governments in response to the crisis. [less ▲]

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See detailThe New Intergovernmentalism in Financial Regulation and European Banking Union
Howarth, David UL; Quaglia, Lucia UL

in Bickerton, Christopher; Puetter, Uwe; Hodson, Dermot (Eds.) The New Intergovernmentalism States and Supranational Actors in the Post-Maastricht Era (2015)

This contribution asks whether a new type of intergovernmentalism has emerged in financial services regulation and Banking Union. Since financial services are a key area of the single market, the chapter ... [more ▼]

This contribution asks whether a new type of intergovernmentalism has emerged in financial services regulation and Banking Union. Since financial services are a key area of the single market, the chapter concludes by reflecting on whether the governance trends in the financial sector can be generalised to other areas of the single market. It is argued that the single market for financial services, which encompasses financial regulation and the plan for Banking Union, provides an interesting mix of 'old' (community) method and 'new' intergovernmentalism. [less ▲]

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See detailDie Bankenunion als Krönung der Wirtschafts- und Währungsunion?
Howarth, David UL; Quaglia, Lucia UL

in Integration (2015), 38(1), 44-59

This article analyses the positions of Germany, France and the EU institutions with regard to the negotiations on two of the most important elements agreed: the Single Supervisory Mechanism (SSM) and the ... [more ▼]

This article analyses the positions of Germany, France and the EU institutions with regard to the negotiations on two of the most important elements agreed: the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM). This article highlights the different approaches and lines of conflict on the centralisation of competences, legal basis, and, in case of the SRM, the sources of funding. [less ▲]

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See detailSupranational Banking Supervision in Europe: The Construction of a Credible Watchdog
Howarth, David UL; Quaglia, Lucia UL; Gren, Jakub UL

in Journal of Common Market Studies (2015), 53(s1),

Does the institutional design of the European Single Supervisory Mechanism (SSM) and its first assessment of systemically important bank stability bolster the credibility of supranational banking ... [more ▼]

Does the institutional design of the European Single Supervisory Mechanism (SSM) and its first assessment of systemically important bank stability bolster the credibility of supranational banking supervision in Europe? One crucial measure of credibility with regard to the SSM and NCA supervision of less significant banks — the large majority of euro area headquartered bank not subject to direct ECB supervision — is the assurance of consistent supervision in the euro area. This involves some degree of convergence of NCA supervision in order to prevent national supervisory forebearance of struggling banks. This contribution thus examines whether or not the design of the SSM provides the foundation to build convergence in euro area supervision of less significant banks, despite very different national supervisory practices and institutional frameworks. The Principal-Agent approach is used to assess the credibility of the SSM design in terms of providing the foundation for consistent supervision. This contribution also examines the credibility of the ECB’s direct supervision of significant banks. The management of the ECB’s Comprehensive Assessment of signficant banks can be seen as the first step in demonstrating the capacity of the ECB to make difficult decisions with regard to the stability of the euro area’s banks. [less ▲]

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See detailThe Steep Road to European Banking Union: Constructing the Single Resolution Mechanism
Howarth, David UL

in Journal of Common Market Studies (2014), 52(s1), 1-16

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See detailHedge Funds
Howarth, David UL; Quaglia, Lucia UL

in Mügge, Daniel (Ed.) Europe and the Governance of Global Finance (2014)

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See detailBanks and the False Dichotomy in the Comparative Political Economy of Finance
Howarth, David UL; Hardie, Iain; Maxfield, Sylvia et al

in World Politics : A Quarterly Journal of International Relations (2013), 65(4),

The wide-ranging Varieties of Capitalism literature rests on a particular conception of banks and banking, which, we argue, no longer reflects the reality of modern financial systems. We take advantage of ... [more ▼]

The wide-ranging Varieties of Capitalism literature rests on a particular conception of banks and banking, which, we argue, no longer reflects the reality of modern financial systems. We take advantage of the greater information regarding bank activities revealed by the financial crisis to consider the reality, across eight of the world’s largest developed economies, of the ‘financial power’ of banks to act as bulwarks against market forces. This article offers a ‘market-based banking’ framework that transcends the bank-based/capital market-based dichotomy that dominates Comparative Political Economy’s (CPE’s) consideration of financial systems, and argues for a future CPE research focus on the activities of banks. By demonstrating how market-based banking increases market influences on the supply of credit, we highlight an under-appreciated source of financial market pressure on non-financial companies (NFCs) that has potential impact across the range of issues that the Varieties of Capitalism (VoC) literature has seen as differentiating national systems, with implications in areas such as labor, welfare, innovation and flexibility. [less ▲]

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See detailBanking on Sterling: Britain's Independence from the Euro Zone
Howarth, David UL

in Perspectives on Politics (2013), 11(3), 972-74

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See detailFrance and the International Financial Crisis: The Legacy of State-Led Finance
Howarth, David UL

in Governance (2013), 26(3), 369395

Despite the far-reaching liberalization of the French banking system over the past quarter century, French banks suffered far less in the international financial crisis (2007–2009) than banks in the ... [more ▼]

Despite the far-reaching liberalization of the French banking system over the past quarter century, French banks suffered far less in the international financial crisis (2007–2009) than banks in the United Kingdom and Germany. However, the French system also suffered far more—at least in the first stages of the crisis—than the banking systems of Southern Europe. By several measures, French banks were world leaders in financial innovation, and the French banking system was highly exposed to international market movements. The limited impact of the crisis, however, owed to the specificities of French “market-based banking.” Deliberate state action over the two decades prior to the crisis created a specific kind of banking system and encouraged forms of financial innovation, the unintentional consequence of which was the limited exposure to the securitization that caused the damage wrought during the financial crisis. [less ▲]

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See detailA Panacea for all Times: the Politics of the German Stability Culture
Howarth, David UL; Rommerskirchen, Charlotte

in West European Politics (2013), 36(4), 750-770

The German Stability Culture is frequently pointed to in the literature as the source of the country’s low inflationary policies and, at the European Union (EU) level, the design of Economic and Monetary ... [more ▼]

The German Stability Culture is frequently pointed to in the literature as the source of the country’s low inflationary policies and, at the European Union (EU) level, the design of Economic and Monetary Union (EMU). In Germany, the term was regularly wielded by central bankers and Christian Democrat (CDU-CSU) politicians to legitimise the move to EMU in the face of a large majority of public opinion opposed, and subsequent EU-level policy developments, particularly in the context of the eurozone debt crisis that erupted in 2009. An ordered probit analysis is used to demonstrate the depth of the German Stability Culture, showing that support for low inflation cuts across all party and ideological lines. Despite this ubiquity, the term has been wielded with regularity only by the centre-right Christian Democrats and is strongly associated with this party. A strategic constructivist analysis is employed to explain this uneven but persistent usage in German domestic politics. [less ▲]

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See detailBanking on Stability: The Political Economy of New Capital Requirements in the European Union
Howarth, David UL

in Journal of European Integration (2013), 35(3), 333-346

The Basel III Accord on a ‘Global regulatory framework for more resilient banks and banking systems’ was issued in late 2010 as the cornerstone of the international regulatory response to the global ... [more ▼]

The Basel III Accord on a ‘Global regulatory framework for more resilient banks and banking systems’ was issued in late 2010 as the cornerstone of the international regulatory response to the global financial crisis. Its adoption into European Union (EU) legislation has, however, been met with considerable member state reticence and intra-EU negotiations are ongoing. This paper investigates the political economy of new capital requirements in the EU, arguing that the institutional features of national banking sectors convincingly account for the divergence in EU member state preferences on capital rules. [less ▲]

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See detailFraming Market-Based Banking and the Financial Crisis
Howarth, David UL; Hardie

in Howarth, David; Hardie, Iain (Eds.) Market-Based Banking and the International Financial Crisis (2013)

This chapter considers market-based banking in more empirical depth across eleven countries. It argues that levels of market-based banking are now a more useful way to compare national banking systems and ... [more ▼]

This chapter considers market-based banking in more empirical depth across eleven countries. It argues that levels of market-based banking are now a more useful way to compare national banking systems and serve, when combined with a focus on other market sources of non-financial corporation (NFC) financing, to provide an alternative to the standard dichotomy of bank-based and market-based financial systems. The chapter considers the degree of market-based assets and liabilities in banks in the eleven banking systems and highlights the differences between systems. It demonstrates how this detail helps explain the differential impact of the financial crisis in terms of timing, the required levels of government support to banking systems, and the impact of the crisis on lending to NFCs. [less ▲]

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