Interest Group Mobilization Patterns in Financial Regulation: A Pre - Post-Crisis Comparison

Over the past years, the EU has created and delegated various executive tasks to a vast number of independent agencies. Although these agencies were first perceived as improvers of effective EU policies due to their non-majoritarian character (hence increasing output legitimacy), they were soon evaluated as non-accountable, technocratic, and above all, undemocratic bodies (hence decreasing input-legitimacy). To compensate for this ‘agencification’ of EU policymaking, both policymakers and academics sought relief in the involvement of relevant stakeholders in agencies’ processes. The idea is that everyone affected by a political decision should be able to participate in making that decision. This stakeholder-model argues that institutions are able to design policymaking processes in such a way that it not only can increase stakeholder involvement, but also attract a diverse set of stakeholders. The second part of the model suggests that increased mobilization functions as a healing force for ‘agencification’, and is therefore able to reduce the legitimacy deficit. However, empirical evidence of this relation between institutional design and interest group mobilization remains inconclusive. This paper focusses on recent reforms in the policy field of financial regulation, in which in the three European Supervisory Authorities (ESAs) agencies unlawfully gained legislative competences and had to implement various instruments to attract interest groups. This paper looks into the effects of these institutional reforms on interest group mobilization in terms of density and diversity of mobilized groups. Here, I expect an increase in interest group mobilization and an increase in the diversity of mobilized groups, due to the more extensive reach of the agencies’ operations and the increase in the agencies’ demand for technical and administrative information. This research is based on a novel dataset of interest group responses on public consultations of the ESAs before and after the financial crisis. The findings counterintuitively show that after the institutional reforms the density of interest groups per consultation decreases. Although the diversity of interest groups increases, it is not non-business groups or non-regulated business groups that mobilize more, but the financial services sector refraining from mobilizing. These findings directly contradict the premises of the stakeholder model and questions its effectiveness.