Skip to main content
SpringerLink
Log in

A framework for managing regulatory policy life-cycle challenges: an empirical design

  • Original Article
  • Published:
Journal of Banking Regulation Aims and scope Submit manuscript

A Correction to this article was published on 06 July 2021

This article has been updated

Abstract

This paper proposes a process for developing a comprehensive policy life-cycle management (PLM) framework that institutionalises the essential elements of regulatory policy life-cycle implementation. Central banks face challenges during the life-cycle processes of regulatory policy management. The evident reasons for some of these challenges are missing significant policy quality attributes (PQAs) associated with the dynamics of multidimensional constraints that negatively impact the policies' return. This paper suggests using PQAs to formalise a systematic and comprehensive PLM framework. Thematic analysis of data collected at Saudi Central Bank (SAMA) revealed thirteen policy life-cycle challenges and identified eleven PQAs. The constructed PLM framework encompasses six phases: engineering, analysis, evaluation, execution, monitoring, and optimisation. The application of the PLM framework and its PQAs in a single case study provides insights into its potential usability and strength in improving regulatory policy implementation more broadly. The extended PLM framework's contribution is to open avenues of research and inform practice for diverse stakeholders such as regulatory authorities, policy science community engagement, and on-the ground regulatory policy initiatives.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Change history

References

  1. Alrabiah, A. 2018. Optimal regulation of banking system’s advanced credit risk management by unified computational representation of business processes across the entire banking system. Cogent Economics & Finance 6 (1): 1–22. https://doi.org/10.1080/23322039.2018.1486685.

    Article  Google Scholar 

  2. Alrabiah, A., and S. Drew. 2018. Deriving organisational business process change factors using the hierarchical elicitation workshop. International Journal of Business Process Integration and Management 9 (1): 1–11. https://doi.org/10.1504/IJBPIM.2018.10013982.

    Article  Google Scholar 

  3. Alrabiah, A., and S. Drew. 2018. Formulating optimal business process change decisions using a computational hierarchical change management structure framework: a case study. Journal of Systems and Information Technology 20 (2): 207–240. https://doi.org/10.1108/JSIT-08-2017-0069.

    Article  Google Scholar 

  4. Alrabiah, A., and S. Drew. 2020. Proactive management of regulatory policy ripple effects via a computational hierarchical change management structure. Risks 8 (2): 49.

    Article  Google Scholar 

  5. Andrews, M., L. Pritchett, and M. Woolcock. 2013. Escaping capability traps through problem driven iterative adaptation (PDIA). World Development 51: 234–244.

    Article  Google Scholar 

  6. Bernanke, B.S. 2013. A century of US central banking: goals, frameworks, accountability. Journal of Economic Perspectives 27 (4): 3–16.

    Article  Google Scholar 

  7. Bhada, S.V., and R. Krishnan. 2020. A model centric framework and approach for complex systems policy. IEEE Systems Journal 1.

  8. BIS. 2013. Integrated management of micro-databases. In Deepening business intelligence within central banks’ statistical systems (Vol. 37). Porto, Portugal: Irving Fisher Committee on Central Bank Statistics.

  9. BIS. 2019. Sixteenth progress report on adoption of the Basel regulatory framework. Retrieved from.

  10. Bitetti, R. 2018. Principles of the Austrian tradition in the policy cycle Austrian economics: the next generation 145

  11. Borio, C. 2011. Central banking post-crisis: What compass for uncharted waters. Basel: BIS, 353, 353.

  12. Braun, V., and V. Clarke. 2006. Using thematic analysis in psychology. Qualitative Research in Psychology 3 (2): 77–101.

    Article  Google Scholar 

  13. Broeders, D., and Prenio, J. 2018. Innovative technology in financial supervision (suptech): the experience of early users. Retrieved from https://www.bis.org/fsi/publ/insights9.htm.

  14. Brunnermeier, M., J. De Gregorio, B. Eichengreen, M. El-Erian, A. Fraga, and T. Ito. 2012. Banks and cross-border capital flows: policy challenges and regulatory responses. Committee on International Economic Policy and Reform.

  15. Burnard, P., P. Gill, K. Stewart, E. Treasure, and B. Chadwick. 2008. Analysing and presenting qualitative data. British Dental Journal 204 (8): 429.

    Article  Google Scholar 

  16. Buzuku, S., J. Farfan, K. Harmaa, A. Kraslawski, and T. Kässi. 2019. A case study of complex policy design: the systems engineering approach. Complexity.

  17. Capano, G., and A. Pritoni. 2020. Policy cycle. In The Palgrave encyclopedia of interest groups, lobbying and public affairs, ed. P. Harris, A. Bitonti, C.S. Fleisher, and A. Skorkjær Binderkrantz, 1–7. Cham: Springer International Publishing.

    Google Scholar 

  18. Carstens, A. 2017. Policymaking-respecting the life-cycle of policies. Retrieved from https://www.bis.org/review/r170816b.pdf.

  19. Carstens, A. 2018. The policy life cycle and capacity-building needs of financial sector authorities. Paper presented at the The BIS-IMF symposium on Capacity-building in financial sector regulation and supervision, Basel. https://www.bis.org/speeches/sp180208.htm.

  20. Carstens A. 2019. The role of regulation, implementation and research in promoting financial stability.

  21. Coglianese, C. 2012. Measuring Regulatory Performance evaluating the impact of regulation and regulatory policy. OECD Expert Paper No. 1: 1–59.

    Google Scholar 

  22. Coglianese, C. 2018. Optimizing regulation for an optimizing economy. U. Pa. JL & Pub. Aff. 4: 1.

    Google Scholar 

  23. Constâncio, V., I. Cabral, C. Detken, J. Fell, J. Henry, P. Hiebert, . . . C. Salleo. 2019. Macroprudential policy at the ECB: Institutional framework, strategy, analytical tools and policies. ECB Occasional Paper (227).

  24. Cubillas, E., A.I. Fernández, and F. González. 2017. How credible is a too-big-to-fail policy? International evidence from market discipline. Journal of Financial Intermediation 29: 46–67.

    Article  Google Scholar 

  25. Eisenhardt, K.M. 1989. Agency theory: an assessment and review. Academy of Management Review 14 (1): 57–74.

    Article  Google Scholar 

  26. Elgammal, A., and T. Butler. 2015. Towards a framework for semantically-enabled compliance management in financial services. Paper presented at the Service-Oriented Computing-ICSOC 2014 Workshops.

  27. Financial Stability Board. 2017. Framework for post-implementation evaluation of the effects of the G20 financial regulatory reforms. Basel: Financial Stability Board.

    Google Scholar 

  28. Gong, Y., and M. Janssen. 2010. Agent-based simulation for evaluating flexible and agile business processes: separating knowledge rules, process rules and information resources. Paper presented at the Workshop on Enterprise and Organizational Modeling and Simulation.

  29. Hartmann, P., H. Huang, and D. Schoenmaker. 2018. The changing fortunes of central banking. Cambridge University Press.

  30. Harvard University. 2018. Policy formulation and implementation as a design challenge. Evidence for policy design. Retrieved from https://epod.cid.harvard.edu/sites/default/files/inline-files/20180531%20SPDI%20Vocation%20skills%20flyer.pdf.

  31. Hernández de Cos, P. 2020. Basel III: the implementation imperative2020 (June, 26). Retrieved from https://www.bis.org/speeches/sp200130.pdf.

  32. Howlett, M. 2014. Policy design: What, who, how and why. L’instrumentation et Ses Effets 281–315.

  33. Howlett, M. 2019. Designing public policies: principles and instruments. Routledge.

  34. Howlett, M. 2020. Dealing with the dark side of policy-making: managing behavioural risk and volatility in policy designs. Journal of Comparative Policy Analysis: Research and Practice 1–14.

  35. Howlett, M., G. Capano, and M. Ramesh. 2018. Designing for robustness: surprise, agility and improvisation in policy design. In: Taylor & Francis.

  36. Howlett, M., and S. Giest. 2012. The policy-making process. In Routledge handbook of public policy (pp. 35–46). Routledge.

  37. Howlett, M., and A. Migone. 2013. Regulatory lifecycles and comparative biotechnology regulation: analysing regulatory regimes in space and time. In Regulating next generation agri-food biotechnologies (pp. 71–94). Routledge.

  38. Howlett, M., and I. Mukherjee. 2017. Handbook of policy formulation. Edward Elgar Publishing.

  39. Howlett, M., and J. Newman. 2013. After “the regulatory moment” in comparative regulatory studies: modeling the early stages of regulatory life cycles. Journal of Comparative Policy Analysis: Research and Practice 15 (2): 107–121.

    Google Scholar 

  40. Howlett, M., S.L. Tan, A. Migone, A. Wellstead, and B. Evans. 2014. The distribution of analytical techniques in policy advisory systems: policy formulation and the tools of policy appraisal. Public Policy and Administration 29 (4): 271–291.

    Article  Google Scholar 

  41. IIA. 2013. The three lines of defense in effective risk management and control. IIA POSITION PAPER. Retrieved from https://na.theiia.org/standards-guidance/Public%20Documents/PP%20The%20Three%20Lines%20of%20Defense%20in%20Effective%20Risk%20Management%20and%20Control.pdf.

  42. IIA. 2020. THE IIA’S THREE LINES MODEL: an update of the Three Lines of Defense, 13. Retrieved from https://na.theiia.org/about-ia/PublicDocuments/Three-Lines-Model-Updated.pdf.

  43. Jann, W., and K. Wegrich. 2017. Theories of the policy cycle. In Handbook of public policy analysis (pp. 69–88). Routledge.

  44. Jordan, A. J., and J.R. Turnpenny. 2015. The tools of policy formulation: actors, capacities, venues and effects. Edward Elgar Publishing.

  45. Kawai, M., and P.J. Morgan. 2012. Central banking for financial stability in Asia. ADBI Working Paper (No. 377). Asian Development Bank Institute, Tokyo.

  46. Kawala-Janik, A., M. Zolubak, M. Podpora, and M. Pelc. 2018. Innovative approach in AGILE policies validation. IFAC-PapersOnLine 51 (6): 301–305.

    Article  Google Scholar 

  47. Laffont, J.-J., and D. Martimort. 2001. The theory of incentives: the principal-agent model. Princeton university press.

  48. Lasswell, H., and D. Lerner. 1951. The policy orientation. Communication Researchers and Policy–Making.

  49. Lim, I., J. Hagendorff, and S. Armitage. 2016. Regulatory monitoring, information asymmetry and accounting quality: evidence from the banking industry. https://efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2016-Switzerland/papers/EFMA2016_0504_fullpaper.pdf.

  50. Longo, J., and K. McNutt. 2018. From policy analysis to policy analytics. In Policy analysis in Canada, 369–389. Bristol: Policy Press.

    Chapter  Google Scholar 

  51. Marchionne, F., and B. Pisicoli. 2017. Banking regulation, institutional quality, and financial crises. Kelley School of Business Research Paper (17–15).

  52. Mba, S.U. 2019. Restructuring: key elements and the financing component. In New financing for distressed businesses in the context of business restructuring law (pp. 75–131). Springer, Cham.

  53. McCaskie, P. 1999. Asymmetric information, adverse selection and moral hazard in the banking industry'. Ministry of Finance & Economic Affairs 27–30.

  54. OCDE, O. 2015. OECD regulatory policy outlook 2015. OECD Publishing.

  55. Radaelli, C.M., and F. De Francesco. 2013. Regulatory quality in Europe: Concepts measures and policy processes. Manchester University Press.

    Book  Google Scholar 

  56. Rihoux, B., and H. Grimm. 2006. Innovative comparative methods for policy analysis: beyond the quantitative-qualitative divide. Springer Science & Business Media.

  57. Santomero, A.M., S. Viotti, and A. Vredin. 2013. Challenges for Central Banking. Springer US.

  58. Saudi Central Bank. 2017. SAMA functions. Retrieved from http://www.sama.gov.sa/en-US/About/Pages/SAMAFunction.aspx.

  59. Shabou, B.M. 2019. An information governance policy is required for my institution, what to do? Practical method and tool enabling efficient management for corporate information assets. In Diverse applications and transferability of maturity models (pp. 61–91). IGI Global.

  60. Simon, W.H. 2010. Optimization and its discontents in regulatory design: bank regulation as an example. Regulation & Governance 4 (1): 3–21.

    Article  Google Scholar 

  61. Soussa, F. 2000. Too big to fail: moral hazard and unfair competition. In Financial stability and central banks (Vol. 5, pp. 5–31). London, Centre for Central Banking Studies, Bank of England.

  62. Stiroh, K. 2019. Policy efficiency in supervision. Paper presented at the Bank Regulation, Lending and Growth. New York

  63. Stufflebeam, D. 2001. Evaluation models. New Directions for Evaluation 2001 (89): 7–98.

    Article  Google Scholar 

  64. Wellstead, A., P. Cairney, and K. Oliver. 2018. Reducing ambiguity to close the science-policy gap. Policy Design and Practice 1 (2): 115–125.

    Article  Google Scholar 

  65. Whitford, A.B., and J.A. Tucker. 2012. Focal points in public policy: Evidence from voluntary regulation. Review of Policy Research 29 (2): 281–299.

    Article  Google Scholar 

  66. Zhu, H. 2012. Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism? Journal of Financial stability 8 (4): 236–251.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of ICT, Griffith University Gold Coast, Gold Coast Campus, 58 Parklands Dr, Southport, Gold Coast, QLD, 4215, Australia

    Abdulrahman Alrabiah

  2. Academic Division, Tasmanian Institute of Learning and Teaching, University of Tasmania, Private Bag 133, Hobart, TAS, 7001, Australia

    Steve Drew

Authors
  1. Abdulrahman Alrabiah
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Steve Drew
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Abdulrahman Alrabiah.

Ethics declarations

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

The original online version of this article was revised: The table in appendix A that indicates the Group column has A, B, C, D, E, and F, but the production team missed to update this column. Now, it has been updated.

Appendix

Appendix

A. Interview consolidated questions.

Policy phase

Group

Related questions

1 Engineering/creation

A.

1. How you create a policy?

2. Please specify the coordination and activities between SAMA’s departments to handle policy creation

3. Please list the challenges or issues that you face during the creation stage of the regulatory policy

2 Analysis

B.

1. How you analyse the intended policy?

2. How you overcome issues appeared during the analysis stage?

3. Please list the challenges you encounter during policy analysis

3 Validation

C.

1. How you validate the policy?

2. How you overcome issues appeared during the validation stage?

3. Please list the challenges you encounter during policy validation

4 Deployment/execution

D.

1. How do you deploy your policy?

2. Why it takes a long time to implement the regulatory policy?

3. What makes the currently implemented regulatory policy system inefficient, among other execution shortcomings?

4. Please list the challenges or issues that you are facing during the implementation of regulatory policy

5 Monitoring

E.

1. How do you monitor the implemented policies?

2. How do you report if you have violations, weakness, or shortcomings issues in the implemented policies?

3. Why many of the implemented policies have negative feedback loops and inefficient?

4. Why do you not have an automated monitoring system for the implemented policies?

5. What are the challenges you currently encountering in this stage?

6 Optimisation

F.

1. How do you measure the implemented policy?

2. How do you measure the return on policy (optimise)?

3. What is the set of procedures that employed to amend the existing policy to meet SAMA objectives?

4. Do you apply any optimisation model? If yes, please describe it. If No, why?

5. Please list the challenges that you face after the implementation of the policies

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Alrabiah, A., Drew, S. A framework for managing regulatory policy life-cycle challenges: an empirical design. J Bank Regul 23, 210–223 (2022). https://doi.org/10.1057/s41261-021-00158-0

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41261-021-00158-0

Keywords

Search

Navigation