CEU Electronic Theses and Dissertations, 2022
| Author | Brenner, Dominik |
|---|---|
| Title | Fortressing on Markets: Financial Supervision in the Capital Markets Union |
| Summary | The financial crisis became a true turning point in EU finance that moved the EU away from market liberalization towards financial stability. While the scope and depth of banking supervision after the financial crisis peaked in the creation of the Banking Union, the post-crisis emphasis on financial stability came at the cost of sluggish economic growth. Born out of the idea that the strengthening of non-bank finance can close this funding gap, the European Commission proposed a Capital Markets Union (CMU) which, in conjunct with the Banking Union, should create a true single market for capital based on market integration and increased supranational supervision. Yet while regulatory progress emerged, supervision remained de facto unchanged. This begs the question what can account for this status quo bias in non-bank financial supervision in the context of the CMU? The existing literature on the political economy of the CMU tends to either focus on member states preferences or takes a constructivist perspective on the CMU. This dissertation, in contrast, relies on a neofunctional perspective based on prior evidence from the Banking Union. The main argument is that in the context of low internationalization, or higher foreign competition relative to their own expansion, functional pressures for supranational supervision among non-bank finance are lacking and the status quo is sustained. In such a case, the financial industry is ’fortressing’ on their home markets to reap the potential benefits of national supervisory forbearance. The analysis is based on a novel dataset from public registers of the European Supervisory Authorities and maps the outward expansion and foreign penetration of non-bank finance in the EU27. The results show overall low levels of internationalization and a tendency for higher foreign competitive pressures for the main types of non-bank finance. Even in those non-bank segments where partial supervisory reform occurred, the outcome sustained an overall status quo bias through reform. These findings thereby contribute to the literature by demonstrating the strength of neofunctionalist explanations beyond mere spill-overs effect in the realm of non-bank financial integration and add to a better understanding of the drivers behind limited supervisory reform. Since the creation of a CMU is an ongoing project, future research should update the current findings with new empirical evidence and bridge the gap between the first CMU period (2015-2019) and ongoing efforts to finalize the Capital Markets Union in the years to come. |
| Supervisor | Csaba, László |
| Department | Political Science PhD |
| Full text | https://www.etd.ceu.edu/2022/brenner_dominik.pdf |
Visit the CEU Library.
© 2007-2021, Central European University