An international comparison of regulatory capture and regulatory outcomes: The case of pension regulators in Ireland and the United States

Abstract

Purpose

This paper aims to analyze how the administrative structure of pension regulators affects regulatory capture or regulatory influence. It uses a historical institutionalist methodology to analyze regulatory capture.

Design/methodology/approach

The authors argue that the less complex allocation of regulatory authority in Ireland makes it more susceptible to regulatory capture or regulatory influence by the regulated industry than in the USA. Also, it is argued that stand-alone agencies are more susceptible to regulatory capture than are agencies that are embedded within larger departments of government. The authors present a five-step process in regulatory capture, with the later steps being used by the regulated industry if the earlier ones have failed.

Findings

The authors find that if the regulated industry has difficulty achieving regulatory capture through influencing the executive branch of government, it can also attempt to influence the legislative and judicial branches, as evidenced by a regulatory episode the USA has recently completed. Ireland has also recently completed reforms that may make regulatory capture more difficult. With a complex regulatory structure including overlapping authority as in the USA, when one agency has been strongly influenced by the regulated industry, another agency may take action to protect the public.

Originality/value

The paper presents international evidence as to the effect of the administrative structure of regulators on regulatory outcomes. It tests a hypothesis that the more complex, overlapping allocation of regulatory authority in the USA makes it less susceptible to regulatory capture.

Citation

Turner, J., Hughes, G. and Maher, M. (2016), "An international comparison of regulatory capture and regulatory outcomes: The case of pension regulators in Ireland and the United States", Journal of Financial Regulation and Compliance, Vol. 24 No. 4, pp. 383-401. https://doi.org/10.1108/JFRC-01-2016-0005