The Regulation of Global Finance, the European Union and Market Power: A Twenty-Year Analysis

This paper sets out to better understand the European Union (EU) as a global financial regulator over the last two decades. It carries out a medium-n study, constructing original data that covers 11 financial regulatory areas in both the EU and the United States (US). Two curious empirical trends emerge: the international financial crisis of 2008 ushered in a sustained period of stringent EU regulation; and Brussels moved away from homegrown rules to internationalist approaches in a dominant cluster of cases. Our explanation features the causal role of evolving relative EU-US market power. In particular, we develop theoretically and evaluate empirically an argument for why and how the enhancement of a key political element of market power –border-policing capacity –in two powerful jurisdictions constrains regulatory autonomy in both. Using congruence analysis and process-tracing, we show that our explanation does better than alternatives. The study advances third-wave IPE theory and, in particular, the market power research program, illustrates methodological solutions to how scholars might balance the wide-ranging demands on qualitative research, and offers answers to policy-relevant questions about the EU’s role in the governance of global finance and the salience of relative market power in a multipolar world.