Interest Groups and Bank Regulation

It is clear that the organization and operation of political and institutional systems shape bank regulations. Political and institutional systems are also important because they can limit the degree to which narrowly-focused interest groups can unduly influence policy choices. This paper presents illustrative results supporting this position. Specifically, evidence is provided indicating that political and institutional characteristics exist in countries that will determine the degree to which special interest groups will be able to exert undue influence on government leaders and regulatory officials to favor narrow special interests rather than the broader public interests