Abstract

http://ssrn.com/abstract=2377826
 


 



Do U.S. Financial Regulators Listen to the Public? Testing the Regulatory Process with the RegRank Algorithm


Andrei A. Kirilenko


Massachusetts Institute of Technology (MIT) Sloan School of Management

Shawn Mankad


University of Maryland Robert H. Smith School of Business

George Michailidis


University of Michigan at Ann Arbor

June 29, 2014

Robert H. Smith School Research Paper

Abstract:     
We examine the notice-and-comment process and its impact on influencing regulatory decisions by analyzing the text of public rule-making documents of the Commodity Futures Trading Commission (CFTC) and associated comments. For this task, we develop a data mining framework and an algorithm called RegRank, which learns the thematic structure of regulatory rules and public comments and then assigns tone weights to each theme to come up with an aggregate score for each document. Based on these scores we test the hypothesis that the CFTC adjusts the final rule issued in the direction of tone expressed in public comments. Our findings strongly support this hypothesis and further suggest that this mostly occurs in response to comments from the regulated financial industry. We posit that the RegRank algorithm and related text mining methods have the potential to empower the public to test whether it has been given the "due process" and hence keep government agencies in check.

Number of Pages in PDF File: 20

JEL Classification: H10, K23, C19

working papers series


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Date posted: January 12, 2014 ; Last revised: June 30, 2014

Suggested Citation

Kirilenko, Andrei A. and Mankad, Shawn and Michailidis, George, Do U.S. Financial Regulators Listen to the Public? Testing the Regulatory Process with the RegRank Algorithm (June 29, 2014). Robert H. Smith School Research Paper. Available at SSRN: http://ssrn.com/abstract=2377826 or http://dx.doi.org/10.2139/ssrn.2377826

Contact Information

Andrei A. Kirilenko
Massachusetts Institute of Technology (MIT) Sloan School of Management ( email )
100 Main Street
E62-612
Cambridge, MA 02142
United States
HOME PAGE: http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=54152
Shawn Mankad (Contact Author)
University of Maryland Robert H. Smith School of Business ( email )
Robert H. Smith School of Business
4313 Van Munching Hall
College Park, MD 20815
United States
HOME PAGE: http://www.rhsmith.umd.edu/faculty/smankad
George Michailidis
University of Michigan at Ann Arbor ( email )
701 Tappan St. Rm E2600
Ann Arbor, MI 48109
United States
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