The Correlates of Change in International Financial Regulation

TLDR

The study seeks to identify political and economic variables that robustly associate with changes in international financial regulation. The authors performed multivariate regressions using a quantitative regulation index derived from coding laws of 64 countries, estimating its association with long‑run growth, corporate tax, government spending, and income inequality based on established econometric frameworks. Results suggest a new research agenda for international financial regulation.

Abstract

With which political and economic variables is change in international financial regulation robustly associated? I undertook multivariate regression analysis of this question using a quantitative measure of the regulation of international financial transactions. The measure was created by coding the laws of 64 nations. The associations between change in international financial regulation and measures of long-run economic growth, corporate taxation, government expenditures, and income inequality are estimated, using the models, methods, and data of Batro (1991), Deininger and Squire (1996a), Leamer (1983, 1985), and Levine and Renelt (1992). The findings point to a new agenda for research on international financial regulation.