(P15) Private Regulation of Finance in the Post-Lehman World
Konrad Borowicz, Assistant Professor of Transnational Financial Regulation, Tilburg Law and Economics Center, Tilburg Law School
It has been over 10 years since the spectacular collapse of Lehman Brothers. The collapse of Lehman unleashed a global financial crisis that led to a radical overhaul of regulatory frameworks for banking and finance around the world. The financial industry has been confronted with an immense challenge of complying with a new and extraordinarily complex regulatory system. That system relies to a great extent on public regulation. Private regulation has become a much less prominent feature of regulatory governance in the post-Lehman world.
Perhaps, to some, this is warranted. The crisis was, by and large, the result of the financial industry’s pursuit of economic profit and the government’s inability, or unwillingness, to keep it in check. However, there are limits to what government regulation can achieve given the dynamic and complex nature of the global financial system. While the post-Lehman regulatory frameworks in the US, the EU and the Asia-Pacific region recognize the necessity of reliance on private actors, the exact nature and scope of their involvement in those frameworks requires a careful re-examination.
This panel welcomes empirical and theoretical contributions investigating the role of private regulation in the post-Lehman world. The financial crisis provided ample opportunities to test hypotheses regarding private regulation articulated in the pre-Lehman era. Are those hypotheses or theories of private collective action (such as those revolving around regulatory capture, information asymmetries, as well as small size and homogeneity) still valid today? What can the crisis teach us about the evolution and resilience of private regulation and, in particular, transnational private regulation? How do private actors act, react and transform due to exogenous, albeit socially important, events that call for paradigm shifts in regulatory governance? What endogenous characteristic allow private bodies to remain resilient at times of such paradigm shifts?