The Deregulatory Snowball: Explaining Deregulation in the Financial Industry

Thomas H. Hammond, Jack H. Knott

Research output: Contribution to journalArticlepeer-review

Abstract

Most theories of regulatory politics have a common implication: Once regulations are in place, they are exceedingly difficult to remove. At best, a particular regulatory regime will remain stable for a long period of time; at worst, regulation will beget even more regulation. Given these theories the deregulation that has occurred in the American economy in the past decade is almost inexplicable. Several reasons have been suggested for this deregulation. In this paper we present an explanation which, while not incompatible with these previous accounts, suggests a somewhat different perspective on deregulation. Our explanation stresses the inherent instability of regulatory regimes. We illustrate our argument through reference to the deregulation of the financial industry. We demonstrate that several changes in the economics and technology of the financial industry started a “snowball” of deregulation which gradually picked up momentum as it rolled downhill, ultimately sweeping away many of the regulations in its path.

Original languageEnglish (US)
Pages (from-to)3-30
Number of pages28
JournalThe Journal of Politics
Volume50
Issue number1
DOIs
StatePublished - Feb 1988

ASJC Scopus subject areas

  • Sociology and Political Science

Fingerprint Dive into the research topics of 'The Deregulatory Snowball: Explaining Deregulation in the Financial Industry'. Together they form a unique fingerprint.

Cite this