The stakes of global venue shopping: examining bank lobbying in the Basel Committee and the European Union

Abstract

The galloping pace of globalisation has not only led to the expansion of firms across national borders and an exponential increase in the interdependency of international markets, but it has also triggered the development of the regulatory environment into a multilevel arena consisting of numerous and often overlapping and competing global institutions and regulatory jurisdictions. Our paper examines venue shopping at this global level. We argue that existing theories of multilevel venue shopping are not well suited to explaining global venue shopping. Advancing a novel theoretical framework, we argue that the decision to lobby multiple global venues is a function of the extent of firms’ international business activities and investments. We test this theory in the case of post-crisis banking regulation in the European Union and the Basel Committee on Banking Supervision. Assessing banks’ international activities in terms of the number, international scope, and geographical diversity of their subsidiaries, we find evidence supporting our argument. The new post-crisis banking rules posed a serious threat to banks’ international financial activities and banks facing the greatest costs of these new rules were also most likely to engage in global venue shopping.

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Fig. 1

Notes

  1. 1.

    We define advocacy groups as ‘non-profit or profit interest organisations that may pursue domestic or global strategies, or adopt a mix of domestic and global strategies to achieve their goals’ (Dellmuth and Bloodgood, this issue page 3). Also see Baroni et al. (2014) for a discussion of the ‘interest group’ concept.

  2. 2.

    One important exception is Beyers and Kerremans (2012) who examine venue shopping across national, EU, and WTO levels.

  3. 3.

    Venue shopping can therefore be characterised as the engagement of advocacy groups in multilevel lobbying games (Marshall and Bernhagen 2017, 984).

  4. 4.

    For good overviews of the Basel Committee and the various Basel Accords, see Goodhart (2011) and Tarullo (2008).

  5. 5.

    This time period corresponds to the first and last consultations for either CRR-CRDIV or Basel III.

  6. 6.

    Available at: https://orbis4.bvdinfo.com. Accessed 2/4/2018.

  7. 7.

    Definitions of FDI also commonly refer to greenfield investment: the creation of new facilities or assets in foreign countries. However, this is not applicable to banks’ international activities (see Cohn 2016, 415).

  8. 8.

    Note that HHI usually ranges from 0 (extreme diversity) to 1 (extreme concentration). However, these values have been reversed to make this indicator more intuitive relative to our other measures of International Scope.

  9. 9.

    https://rulemaking.worldbank.org/ [last accessed 22.5.2019]

  10. 10.

    https://www.heritage.org/index/ [last accessed 22.5.2019].

  11. 11.

    https://stats.idre.ucla.edu/stata/output/multinomial-logistic-regression/.

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Appendix

Appendix

See Tables 2, 3, 4, 5, 6, 7 and 8.

Table 2 Multinomial logistic regression analysis of the impact of international scope on global venue shopping using BCBS member general
Table 3 Multinomial logistic regression analysis of the impact of international scope on global venue shopping using GUO data
Table 4 Logistic regression analysis of the impact of international scope on global venue shopping
Table 5 Summary statistics
Table 6 List of questions used from the global indicators of regulatory governance data set
Table 7 List of banks
Table 8 Test for multicollinearity

Figure 2 presents stark differences across banks when we compare global venue shopping (lobbying in the EU and BCBS) to lobbying in just one venue. Banks engaged in global venue shopping have a much larger number of subsidiaries (Number of subsidiaries) and have many more subsidiaries in a larger (Reach of subsidiaries) and more diverse range of countries (Diversity of subsidiaries). ANOVA tests show statistically significant differences in the means for all three indicators.

Fig. 2
figure2

Box and whisker plot of banks’ international scope

See Figs. 3 and 4.

Fig. 3
figure3

Marginal effects of international scope on global venue shopping for EU banks lobbying the EU only

Fig. 4
figure4

Marginal effects of international scope on global venue shopping for BCBS banks lobbying the BCBS only

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Chalmers, A.W., Iacobov, A.A. The stakes of global venue shopping: examining bank lobbying in the Basel Committee and the European Union. Int Groups Adv 8, 433–459 (2019). https://doi.org/10.1057/s41309-019-00059-8

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Keywords

  • Advocacy
  • Venue shopping
  • Banking
  • BCBS
  • EU