Subproject: “Expectations of Regulation – Regulation of Expectations: On the Genesis of Disappointed Expectations in the Area of Bank Regulation”
Project Management: Prof. Dr. Ulrich Klüh
Project Handling: Alen Bosankic
Sponsored by: Federal Ministry of Education and Research in the programme “Financial System and Society; Changing Meanings and Functions of the Financial System and Implications for the Emergence, Overcoming and Avoidance of Financial Crises”.
The financial sector, and in particular banks, can rightly be attributed a central infrastructure function for the economy of capitalist societies. Since the recent financial crisis, this has (again) been perceived as disturbed in society, raising the question of what it depends on, whether and how social expectations are received and served by the banking system, and whether and how these processes can be influenced.
Based on this central question, the Oswald von Nell-Breuning-Institut für Wirtschafts- und Gesellschaftsethik der philosophisch-theologischen Hochschule St. Georgen (NBI), the Sociological Research Institute Göttingen (SOFI) at the University of Göttingen and the Chair of Economics at the University of Applied Sciences Darmstadt (h_da) have joined forces to form a joint social science project. The aim of the joint project is to analyse the relationships between social expectations, regulation and the economic actions of banking companies and the actions of individuals working in banks. The different perspectives will be worked on by one institute each (subproject).
The project proceeds in two steps:
- On the one hand, the development of concepts of rationality and legitimacy with which banks and banking systems in Germany are confronted by the general political or lay public, the expert public of financial regulators and within the framework of the business community are to be reconstructed.
Secondly, to analyse how the expectations in question become practically effective at the level of banks and credit institutions, on the assumption that banks as strategically acting collective actors independently interpret and strategically refer to the ambiguous and contradictory expectations placed on them. The project, which is located at the Darmstadt University of Applied Sciences, investigates in particular the specialist public of the institutions involved in the regulatory processes.
- For this expert public, a strong continuity of expectation formation, disappointment or confirmation of expectations as well as revision of expectations can be assumed. It can also be assumed that the interplay between expectations of different order is reflected more strongly. Since banking organisations are at the centre of the overall project, the study is based on the initiatives of the Basel Committee that have been relevant for credit institutions since the mid-1970s. In this context, particular attention will be paid to the economic support of new, de- and re-regulation.
The following research questions will be addressed by means of an analysis of the documents relevant to the corresponding consultation processes and interviews with experts:
- Which concrete functional expectations can be identified in regulatory processes and their economic accompaniment and which role do these functional expectations play for the banking system and for individual banks in setting rules?
- Which behavioural expectations are present, both with regard to interactions regarding the rule-setting processes themselves and with regard to other stakeholders (customers, employees, shareholders and owners) of the financial institutions?
- Do the different operational logics of systems and organisations come into play in the expectation formation of regulatory authorities and their initiators from academia and experts?
- To what extent and in what way is a distinction made in the formulation of expectations of credit institutions between different forms of constitution?
- In what way are expectations between the groups directly involved in the regulatory processes coupled with the expectations of the public?
Particular attention will be paid to the special features of the German banking system. In connection with the determination of functional expectations, the question of whether the three pillars of the German system have different expectations will be addressed. In this context, it would also be possible to switch between phases of converging and diverging expectations of public, cooperative and private institutions. Since the sociological examination of the Basel Committee’s work to date has focused primarily on the emergence and nature of transnational regulatory structures, the project addresses a significant research gap.