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Compliance forces, domestic policy process, and international regulatory standards: Compliance with Basel III

Published online by Cambridge University Press:  08 May 2019

Mehmet Kerem Coban Open the ORCID record for Mehmet Kerem Coban [Opens in a new window]
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Abstract

This article contributes to our understanding of how and why developing countries would comply with international banking regulatory standards, Basel standards. The article demonstrates the interplay between opportunity structures constituted by transnationalization of public policymaking and domestic institutional setting, and how forces of compliance resonate in the domestic politics of compliance. The empirical findings are based on Turkey's compliance with Basel standards. It relies on fieldwork that involves semi-structured qualitative interviews with senior regulators and bankers, which are complemented with analysis of secondary data. The article shows that a capable and willing regulator could capitalize on the top-down policymaking style which restricts the regulatee's access to international negotiations, and sets the terms at the domestic level. Direct access to international negotiations, resource asymmetry in favor of the regulator, and superior “negotiation knowledge” helped the regulator pacify a critical, skeptical regulatee, and drive the compliance process. The article also shows that the compliance process takes place at three stages: policy formulation at the international level, an “interpretation stage” in between the international and the domestic levels, and finally the domestic policy process.

Keywords

compliancebanking regulationinternational regulatory standardsBasel IIIdeveloping countries
Type
Research Article
Information
Business and Politics , Volume 22 , Special Issue 1: Ten Years of Regulatory Reform Since the International Financial Crisis: Understanding Bank Influence in the European and International Context , March 2020 , pp. 161 - 195
Copyright
Copyright © V.K. Aggarwal 2019 and published under exclusive license to Cambridge University Press

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Footnotes

†

Earlier versions of this paper were presented at the 3rd International Conference on Public Policy (ICPP3) in Singapore in July 2017 and the 3rd Interdisciplinary Worksop of Turkish Political Economy Society (TPES) at Bilkent University, Ankara, in April, 2018. I am grateful to the participants’ comments and suggestions at these occasions. I am grateful to Ramkishen S. Rajan, Kurtulus Gemici, Razeen Sally, David Levi-Faur, Lucia Quaglia, Feng Qiushi, Michael Howlett, M. Ramesh, Caner Bakir, Tolga Bolukbasi, Kathryn Lavelle, Federica Infantino, Iftikhar A. Lodhi, Yvonne Guo, and Isha Dayal for their constructive suggestions and comments on the earlier versions of this paper. The author thanks the editors of the Special Issue and the journal as well as three anonymous referees. The author is grateful to interviewed regulators, central bankers, and bankers for their openness to the interview questions. The author gratefully acknowledges the PhD Academic Support Fund of the Lee Kuan Yew School of Public Policy, National University of Singapore, and organizational support of GLODEM, Koc University for hosting the author as a Research Associate.

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