Shedding Light on EU Financial Regulators: A Sociological and Psychological Perspective

Abstract

The article adopts a socio-psychological perspective to approach financial regulation in the European Union. While behavioural approaches to finance have expanded the understanding of markets’ dynamics, the analytical tools of behavioural sciences have been seldom applied to financial regulators. Through the lenses of social-psychology, the article fills this gap and explores how financial regulators ‘think’. After offering a typology to navigate through the multi-layered EU architectural framework for financial markets regulation and supervisions, the socio-psychological dimension of selected EU institutions is examined by looking at their constitutional and legal framework. To this aim, the article focuses on the group dynamics within the primary decision-making organs of the European Commission, the European Central Bank, and the European Supervisory Authorities. These organs are considered as groups of individuals and their behaviours analysed through the prism of the ‘unified theory of social relations’. This approach is deployed to offer new insights over current tensions between Eurozone and non-Eurozone countries, and sheds new light over the fractures, within regulators, generated by the UK’s decision to leave the EU.

Keywords: Financial Regulation, Supervision, European Union, Common Interest, Multi-Level Governance, European Supervisory Authorities, EBA, ESMA, European Central Bank, Commission, Social-Psychology, Theory of Social Relations, Social Behaviors, Behavioral, Collective Decision-Making, Brexit, UK, Eurozone

JEL Classification: K22, K23, K33, D70, D73, D78, F15, F55, F65, G18, G28, N24