CAMPAIGN CONTRIBUTIONS AND FINANCIAL REGULATION: evidence from the United States
12 Apr 2019
A 1% increase in campaign contribution from the financial sector can lead to a 12% increase in the likelihood of a politician voting to decrease the regulatory burden faced by financial firms.
This is according to a study by João Rafael Cunha presented at the Royal Economic Society annual conference at the University of Warwick in April, which looks at voting on financial regulation in the United States Congress between 1991-2014.
The author looks at four factors that can influence voting in financial regulation: campaign contributions, constituency interests, economic conditions and ideology. He finds that there is a positive correlation between campaign contributions of the financial sector to a lawmaker and their vote in favour of deregulation.
According to the researcher, this analysis contributes to a better understanding of the politics of financial regulation given that the financial sector is the largest corporate contributor to election campaigns in the United States. It allows him to explore issues of influence on legislation through campaign contributions and ownership of equity by politicians in financial firms.
The researcher argues that regulation is frequently the product of the strength and organisation of interest groups.
The Making of Financial Regulation - Voting on Financial Regulation in the U.S. Congress by Joao Rafael Cunha is presented at the Royal Economic Society annual conference in April 2019.
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