Delegation and the Regulation of U.S. Financial Markets

71 Pages Posted: 10 Jan 2016 Last revised: 20 Jan 2021

See all articles by Thomas Groll

Thomas Groll

Columbia University - School of International and Public Affairs; Institute for Corruption Studies

Sharyn O'Halloran

Columbia University - School of International & Public Affairs

Geraldine McAllister

Columbia University

Date Written: January 19, 2021

Abstract

We analyze the institutional determinants of U.S. financial market regulation with a generalmodel of the policy-making process in which legislators delegate authority to regulate financialrisk at both the firm and systemic levels. The model explains changes in U.S. financial regulation leading up to the financial crisis. We test the predictions of the general model with a novel, comprehensive data set of financial regulatory laws enacted specifically between 1950 and 2009. The theoretical and empirical analysis finds that economic and political factors impact Congress’ decision to delegate regulatory authority to executive agencies, which in turn impacts the stringency of financial market regulation, and our estimation results indicate that political factors may have been stronger and resulted in inefficiencies.

Keywords: Financial Regulation, Systemic Risk, Delegation, Partisan Conflict

Suggested Citation

Groll, Thomas and O'Halloran, Sharyn and McAllister, G, Delegation and the Regulation of U.S. Financial Markets (January 19, 2021). Available at SSRN: https://ssrn.com/abstract=2712915 or http://dx.doi.org/10.2139/ssrn.2712915

Thomas Groll (Contact Author)

Columbia University - School of International and Public Affairs ( email )

420 West 118th Street
New York, NY 10027
United States
2128510194 (Phone)

HOME PAGE: http://www.columbia.edu/~tg2451

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

Sharyn O'Halloran

Columbia University - School of International & Public Affairs ( email )

420 West 118th Street
New York, NY 10027
United States
(212) 854-3242 (Phone)
(212) 222-0598 (Fax)

G McAllister

Columbia University ( email )

535 West 116th Street
New York, NY 10027
United States

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