When do governments implement voluntary codes and standards? : the experience of financial codes in East Asia

Can there be a world-wide "race to the top" in financial regulatory practices? The international standards and codes issued by major international institutions in recent years assumes this is possible. In this paper, I consider to what extent this effort has been successful in East Asia. East Asia is a good case study of compliance with this new regime for at least three reasons. First, East Asian countries were a particular focus of this international convergence strategy because of the widely accepted view that inadequate financial sector supervision was a fundamental cause of the Asian crisis of the late 1990s. Second, the standards and codes themselves are largely based upon a western, even Anglo-Saxon, model of financial sector governance that poses special difficulties for many East Asian economies. Third, as I demonstrate below, there are considerable differences within East Asia relating to the degree of success in compliance with the standards and codes, and across different standards. Exploring these differences can help to illuminate the causes of failure and success in compliance in general.