Industry self-regulation in the global financial services sector

Jones, Danielle Renee

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https://hdl.handle.net/2142/101798 Copy

Description

Title

Industry self-regulation in the global financial services sector

Author(s)

Jones, Danielle Renee

Issue Date

2018-07-10

Director of Research (if dissertation) or Advisor (if thesis)

Clougherty, Joseph A

Doctoral Committee Chair(s)

Clougherty, Joseph A

Committee Member(s)

• Bucheli, Marcelo
• Mahoney, Joseph T.
• Yao, Fiona K

Department of Study

Business Administration

Discipline

Business Administration

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• industry self-regulation
• regulation
• financial services
• foreign direct investment
• financial crisis

Abstract

This dissertation examines industry self-regulation within the context of the global financial services sector. Increases in globalization and multinational enterprise (MNE) activity over the last few decades have created a need for global governance and coordinated industry standards across borders. The financial sector, in particular, is very integrated across borders, making the industry and national economies highly susceptible to crises and contagion if not regulated properly. However, national governments are limited in their ability to adequately regulate business activity adequately outside of their borders. Thus, the global financial sector has become substantially regulated under voluntary mechanisms including intergovernmental agreements on standards and best practices for supervision and regulation, as well as self-regulation implemented by firms and industry associations. Researchers, practitioners, and policymakers continue to debate the effectiveness of self-regulation; however, this debate is quite muddled and convoluted, which has kept us from reaching a consensus, or at least a better understanding of the effectiveness of regulatory frameworks in which government and private actors are heavily involved. Using the context of the global financial services sector, this dissertation examines: (1) how the study of industry self-regulation can be incorporated into international business (IB) research in order to increase our understanding of the phenomenon; (2) the nature of the relationship between industry government regulation and self-regulation; and (3) the effectiveness of self-regulation in responding to a major economic crisis and its effectiveness in attracting inward foreign direct investment (FDI). The first essay provides a review of the literature debating the effectiveness of designating regulatory authority of an industry to the government versus firms and other private sector individuals closely tied to the industry. Additionally, I bring this debate into the IB field by providing an example of how industry self-regulation research can be applied to IB research. Specifically, I nest the government- versus self-regulation discussion within the context of attracting inward FDI in the financial services sector. Finally, I propose a future research agenda for international business scholars in order to advance our understanding of industry self-regulation, particularly in an international context. The second essay presents an exploratory study that provides additional insights into the complex global regulatory environment by analyzing the relationship between government regulation and self-regulation, and by examining how each type of regulation responds to a major economic crisis. Empirical findings from this study indicate that: (1) there is no evidence of a causal relationship between government regulation and self-regulation; (2) there is no evidence of a complementary or substitutive relationship between government regulation and self-regulation; (3) government regulation tends to strengthen in response to a crisis; (4) self-regulation tends to respond just as quickly (and perhaps quicker) to a crisis as government regulation; and (5) self-regulation tends to weaken in response to a crisis. Lastly, the third essay examines the effect of the strength of various host country regulations on attracting inward FDI flows in the financial services sector. Specifically, I employ a multilevel analysis by testing the effects of regulations at the country and industry levels. Additionally, I examine the effects of differences in regulatory authority by testing the relationships between inward FDI and the strength of host country regulations under the authority of government actors and self-regulation. I find that host countries with weaker national-level regulations and countries with stronger industry-level regulations under the authority of the government encourage FDI within the financial sector. However, self-regulation in the host country does not appear to have a significant effect on foreign investors’ decisions within the financial sector.

Graduation Semester

2018-08

Type of Resource

text

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http://hdl.handle.net/2142/101798

Copyright and License Information

Copyright 2018 Danielle Jones

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