How Administration and Politics Shape Financial Systems

Session Submission Type: Full Paper Panel

Session Description

Few events are as disruptive for democracy as a financial crisis. The global economic crises of the last decade unleashed such a Sturm und Drang of public protest and anger that it led many to question long-held assumptions about democracy, capitalism, and international relations. The need to understand how and why financial systems fail or succeed has never been greater. This panel reflects some of the latest thinking on these questions by exploring the relationship between politics, finance, and administration.

Elliot Posner and Lucia Quaglia shed light on the relationship between money and finance. Using evidence from the European Union, they suggest that the sequence by which monetary and financial systems are created yields predictable patterns that may lead to unintended destabilizing consequences. Kevin Corder explores administrative efforts at regulating foreign banks to ask: How regulators strike a balance between screening out foreign risks and integrating global financial markets? Nicolas Thompson's work explains how America’s central bank became “The Fed,” the center of ideational authority and policy agenda-setter for America's financial system. Thompson traces the political battles over the development of the Federal Open Markets Committee (FOMC) and the successful efforts by Democratic lawmakers to transform the Federal Reserve into the technocratic agency based in Washington, we know today. And finally, Mark Cassell's paper examines the role administration plays in the remarkable survival and success of Germany's public savings banks known as Sparkassen.

Each paper approaches the nexus of politics, finance, and administration with different theoretical and empirical lenses. Yet, all four contributions focus on the role administration plays in shaping a financial system that can be a force for stability and instability in a democracy. The panel is also comparative both in terms of political jurisdictions (US, Germany, EU) and levels of analysis (sub-national, national, supranational). And finally, the panel's expertise brings a variety of fields within political science and political economics to the table. It is thus a chance to hear fresh perspectives on familiar topics.

Sub Unit

• Division 24: Public Administration

Individual Presentations

• Regulating Foreign Banks - J. Kevin Corder, Western Michigan University

• Overlaps and Gaps between Money and Finance: The Case of the European Union - Elliot Posner, Case Western Reserve University; Lucia Quaglia, University of Bologna

• How Administration Supports German Public Savings Banks - Mark Cassell

Chair

• Mark Carl Rom Georgetown University

Discussants

• Mark Carl Rom Georgetown University

• Zhijun Gao Claremont Graduate University