Paradoxes and Failures: ‘New Governance’ Techniques and the Financial Crisis

27 Pages Posted: 3 Nov 2012

See all articles by Julia Black

Julia Black

London School of Economics - Law Department

Date Written: November 2012


This article examines the performance of four ‘new governance’ techniques of regulation in the period leading up to the financial crisis: principles based regulation, risk based regulation, meta‐regulation and enrolment. These techniques have been advocated on the basis that they are responsive, flexible, and in enrolling others in the regulatory project thereby expand its capacity, and even its legitimacy. However, experience in the crisis revealed that in their implementation they can be out of touch or indulgent, focus heavily on auditable systems and processes, and that in enrolling others they can increase vulnerabilities and the potential for negative endogenous effects. The argument is not that there should be a return to adversarial ‘command and control’ regulation, rather that experience of these strategies in the crisis suggests a need to understand in greater depth the refractive effects of the organisational, technical/functional and cognitive dimensions of regulatory governance, if we are to understand and adapt its performance in different contexts.

Keywords: Keywords: financial regulation, new governance, regulation, financial crisis

Suggested Citation

Black, Julia, Paradoxes and Failures: ‘New Governance’ Techniques and the Financial Crisis (November 2012). The Modern Law Review, Vol. 75, Issue 6, pp. 1037-1063, 2012. Available at SSRN: or

Julia Black (Contact Author)

London School of Economics - Law Department ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

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