The Partisanship of Financial Regulators

The Review of Financial Studies, Volume 36, Issue 11, November 2023, Pages 4373–4416, https://doi.org/10.1093/rfs/hhad029

79 Pages Posted: 14 Nov 2019 Last revised: 21 Jan 2024

See all articles by Joseph Engelberg

Joseph Engelberg

University of California, San Diego (UCSD) - Rady School of Management

Matthew Henriksson

University of Tennessee, Knoxville - Haslam College of Business

Asaf Manela

Washington University in St. Louis - John M. Olin Business School; Reichman University

Jared Williams

University of South Florida

Date Written: November 1, 2023

Abstract

We analyze the partisanship of Commissioners at the SEC and Governors at the Federal Reserve Board. Using the language-based approach of Gentzkow, Shapiro, and Taddy (Econometrica, 2019), we identify partisan phrases in Congress, such as “red tape” and “climate change,” and observe their usage among regulators. Although the Fed has remained relatively non-partisan throughout our sample period (1930-2019), we find that partisanship among SEC Commissioners rose recently to an all-time high, driven by more-partisan Commissioners replacing less-partisan ones. This recent partisanship at the SEC appears in both the language of new SEC rules and the voting behavior of SEC Commissioners.

Keywords: Partisanship, Financial Regulation, Textual Analysis

JEL Classification: G1, G2

Suggested Citation

Engelberg, Joseph and Henriksson, Matthew and Manela, Asaf and Williams, Jared, The Partisanship of Financial Regulators (November 1, 2023). The Review of Financial Studies, Volume 36, Issue 11, November 2023, Pages 4373–4416, https://doi.org/10.1093/rfs/hhad029, Available at SSRN: https://ssrn.com/abstract=3481564 or http://dx.doi.org/10.2139/ssrn.3481564

Joseph Engelberg (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Matthew Henriksson

University of Tennessee, Knoxville - Haslam College of Business ( email )

453 Haslam Business Building
Knoxville, TN 37996-4140
United States

Asaf Manela

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-9178 (Phone)

HOME PAGE: http://apps.olin.wustl.edu/faculty/manela

Reichman University ( email )

Israel

Jared Williams

University of South Florida ( email )

Tampa, FL 33620
United States

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