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Banking on Influence: Financial Interests and Network Power in Europe

European Union
Business
Lobbying
Scott James
Kings College London
Scott James
Kings College London
Stefano Pagliari
City St George's, University of London

Abstract

The literature on financialization has detailed the growing interconnections between the financial industry and the wider economy. Research on financial lobbying has identified how influence is often contingent on the capacity of banks to exert ‘network power’ by building alliances across the financial industry and with the wider business community (Pagliari and Young 2014, 2015; James and Christopoulos 2018). But less is known about the extent to which this financial interest ecology extends to regulatory authorities, or how this varies between different national contexts. Varieties of capitalism would predict significant divergence between European countries as a consequence of institutionally-embedded modes of interest intermediation which structure relations between the state and business (Eising 2009). To test these claims, we set out to map the configuration of financial interest networks and explain variation between key EU member states. Our analysis employs a unique dataset that uses textual analysis of stakeholder responses to key pieces of post-crisis EU financial regulation. We show that banks leverage their influence by building broader support networks with both non-financial companies and national regulators, but that these ties vary significantly between different countries. Our paper therefore provides new empirical insights into sources of variation in banks’ capacity to wield power through networks.