Unraveling the Pathways: Exploring Extra-Institutional Financial Influence and Intra-Institutional
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2023-06-23
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en
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The research goal is to clarify the scope of, and limitations to, contemporary financial
political power and ECB entrepreneurship. The research question is: ‘What explains the
ECB's increased involvement in financial regulations since the Euro crisis?’ Bayesian process
tracing is used as a method. The main hypothesis (H1) concerns extra-institutional financial
influence, the rival hypothesis (H2) regards intra-institutional entrepreneurship, and the
combined hypothesis (H3) considers both. Ten cases get assessed: ECB’s increased oversight
of eurozone banks and financial institutions, low interest rates, quantitative easing, bailouts,
internal risk-modelling and banking supervision, high frequency trading and the financial
transaction tax, the climate risk stress test, lobbying fora, advisory groups and financial
associations. For each case, the strength and direction of the evidence is determined by
applying four Bayesian process tracing tests to establish causal inference. The total sum of all
cases determines whether H1, H2 or H3 gets confirmed. The conclusion is that: ‘The ECB’s
increased involvement in financial regulatory matters since the Euro crisis is primarily
caused by extra-institutional financial influence but sometimes by intra-institutional ECB
entrepreneurship.’ The main academic contribution is the discovery of ECB entrepreneurship
as another determinant of ECB’s increased involvement in financial regulations since the
Euro crisis and not solely financial influence. Second, this research showed that central banks
are more susceptible to political and financial influences than their legal independent status
reveals. Third, the expectation that independent central banks will be more inflation-averse
than the government is in contestable since ECB’s policies did contribute to inflation.
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Faculteit der Managementwetenschappen