This chapter reviews the main bodies of literature in international/comparative political economy and public policy, elucidating why existing work has insufficient explanatory power. Second, it then outlines the theoretical framework of the book, its research design, methodology and operationalization, and case-study selection. The analysis employs a two-step approach. The first explains the UK’s financial regulatory preferences (supporting or resisting more stringent rules, i.e. ‘trading up’) as the outcome of the interaction of key domestic actors: elected officials, financial regulators, and the financial industry. In the second step, we explain the UK’s regulatory strategy in international/EU negotiations (as ‘pace setting’, ‘foot dragging’, or ‘fence sitting’) and its influence over regulatory outcomes. By analysing financial regulatory reform as a ‘three-level game’, the domestic political economy approach captures the interdependency of different negotiating arenas over time. The book draws on over sixty in-depth interviews conducted between 2012 and 2019.
Banking on Democracy: The Political Economy of International Private Bank Lending in Emerging Markets