Aneta Spendzharova

Catching Up? Consolidating Liberal Democracy in Bulgaria and Romania after EU Accession

This article investigates the most important determinants of domestic institutional change in combating corruption and reforming the judiciary in Bulgaria and Romania since EU accession in 2007. It explores how EU and domestic incentives trigger domestic institutional change, and how the two interact with one another. It argues that political leaders and parties will only continue and deepen reforms in response to the twin forces of EU and domestic influence. The EU incentives that shape elite choices stem primarily from public monitoring by the European Commission of government performance and the possibility of sanctions by the EU. The domestic incentives centre on winning elections and holding power, with substantial variation explained in part by diverging sources of domestic support.

Issue salience in the European Policy Process: what impact on transposition?

Analyses of agenda setting and decision making have highlighted that issue salience plays an important role in those stages of the policy process. This article investigates the role of issue salience in the implementation stage, focusing on transposition. We examine the extent to which issue salience – the relative importance attached to an issue in relation to others – influences the timeliness of transposing European Union directives in national legislation. We analyse 143 European Union environmental directives adopted in the period 1996–2008 in ten member states. We operationalize issue salience as the salience of hazardous substances and materials, salience for political parties in government and salience for the general public. Our results show faster transposition when environmental issues are salient for the governing political parties, Green political parties are included in the government, and the general public ranks environmental issues as a top priority.

Clawing Back Lost Powers? Parliamentary Scrutiny of the Transposition of EU Social Policy Directives in the Netherlands

For quite some time parliaments were seen as the losers of European integration. As a reaction, several parliaments have sought to exert more control over the executive branch in EU decision-making. An alternative venue for ‘clawing back’ these lost powers is by influencing the domestic transposition of EU policies. Surprisingly, this opportunity for greater parliamentary involvement has not received much scholarly attention. Under what conditions do the parties in parliament engage in ex post scrutiny over transposition? To shed light on this question, this article provides a detailed study of scrutiny by the Dutch parliament over the transposition of two social policy directives, investigating four hypotheses regarding vote-seeking, policy-seeking and office-seeking incentives for parliamentary oversight. The analysis shows that the ex post scrutiny that takes place can mostly be summarised as low-profile scrutiny aimed at information-gathering and position-taking, especially by opposition parties.

Banking Union Through the Back Door? How European Banking Union affects Sweden and the Baltic States

Abstract Swedish decision-makers opted out of the European banking union (EBU) despite the large cross-border presence of Swedish banks in Estonia, Latvia, and Lithuania. The three Baltic states, on the other hand, have already joined the eurozone and are part of the EBU. This article identifies three important domestic considerations that have shaped Sweden’s position. Firstly, Swedish decision-makers were concerned that member states outside the eurozone would not fully participate in EBU decision-making. Secondly, they were reluctant to pay for the recapitalisation or resolution of distressed non-Swedish banks in other EU countries. Thirdly, Sweden preferred to retain regulatory autonomy in crisis management. The article relates Sweden’s position to the overall cautious approach of other non-eurozone members such as the UK and Denmark. Nevertheless, it highlights the enhanced role of the European Central Bank (ECB) in banking supervision not only for eurozone insiders such as Estonia, Latvia, and Lithuania but also for member states outside the Eurozone such as Sweden.

The Conundrum of Solving ‘Too Big to Fail’ in the European Union : Supranationalization at Different Speeds

In the aftermath of the international financial crisis, the European Union (EU) adopted a series of regulatory reforms concerning capital adequacy, bank structures and resolution in order to tackle the risks created by financial institutions that were ‘too big to fail’. This article demonstrates different degrees of progress towards a supranational framework in two important areas of reform: Limited harmonization of the rules on bank structures, but robust progress toward the supranationalization of bank resolution, where the euro area dimension is also considered. What accounts for this variation? We draw on a synthesis of neofunctionalism and liberal intergovernmentalism to explain the diverging outcomes. We explain the low supranationalization in bank structural reforms with the absence of strong spillovers and availability of domestic options to unilaterally contain financial instability. In bank resolution, we examine the causal mechanisms through which significant spillovers modified the government preferences of key Member States.

Becoming a Powerful Regulator: The European Securities and Markets Authority (ESMA) in European Financial Sector Governance

Originating from a networked committee of national supervisory authorities with limited decision-making powers, the European Securities and Markets Authority (ESMA) has become a prominent regulator in European financial sector governance since 2008. It is the single supervisor of credit rating agencies and trade repositories operating in the EU and has recently exercised its new powers to impose fines on firms violating the EU rules. ESMA has both decision-making and information gathering powers. It decides upon important binding technical standards in securities trading and plays a crucial role in the harmonisation of national practices across the EU through issuing guidelines, disseminating best practices and conducting peer reviews. What explains this unparalleled transfer of powers to the supranational level in European financial sector governance? This paper argues that the succession of crises affecting the EU’s financial and economic order since 2008 created a momentum for centralisation of governance, operationalised in terms of the creation of new EU bodies and transfer of powers and competences from the member states to the EU level. Furthermore, as a consequence of a series of EU legislative reforms since 2011, ESMA has received new responsibilities and powers to ensure harmonised rule application across the EU.

Regulatory cascading: Limitations of policy design in European banking structural reforms

Abstract This article examines banking structural reforms introduced in the European Union (EU), placed in an international context. The concept of ‘regulatory cascading’ is put forward to investigate how European policy-makers tackle complex multi-faceted problems, such as that of banks which are ‘too big to fail’. The article shows that partial solutions to the problem introduced in other areas of banking regulation, coupled with strategic activism at the domestic level by key EU member states have constrained the opportunities to design a coherent EU framework regulating bank structures. In response to the Commissions proposal for harmonised European banking structural reforms, the Council has stressed in its position two approaches that closely correspond to the measures adopted in France and Germany, on the one hand, and the UK, on the other hand.

Multi‐level Governance of Banking Regulation in the EU: Evidence from Developing Bank Supervision in Bulgaria and Hungary

Abstract Recent bank collapses as a result of the global financial crisis have highlighted the need to keep international bank supervision practices up to date with technological and product innovations in the sector. In the 1980s, coordination in international financial regulation resulted from multilateral negotiations in which states played a central role. Since then, international banking regulation has undergone significant transformation. This article probes the explanatory power of multi‐level governance in the case of European bank regulation. According to the first proposition examined here, experts play an essential role in policy formulation. The second proposition stipulates that public, private and international actors participate in decision‐making and shape the regulatory outcomes together with national regulators. The third proposition states that independent regulatory agencies, rather than government ministries, implement regulations and monitor compliance. The analysis is based on evidence from two new EU member states, Bulgaria and Hungary, that are representative of the two most common types of bank supervision organizational structure in the EU.

Get Your Money’s Worth from Investment Advice: Analysing the Clash over the Knowledge and Competence Requirements in the Markets in Financial Instruments Directive (MiFID II)

This special issue aims to examine whether there is an enduring politicization in the European Union (EU) “Better Regulation” agenda despite the emphasis on neutral evidence-based policy making. Our article addresses this overarching research question by focusing on the use of stakeholder consultations in the case of financial sector governance, particularly, the amended Markets in Financial Instruments Directive (MiFID II). We show that calibrating key provisions in MiFID II, such as those concerning knowledge and expertise, is not a simple exercise in rational problem definition and policy design. The provisions examined in this article have important repercussions for financial sector firms’ business strategies and operations. Thus, investment firms, banks, training institutes and public organizations have mobilized and actively sought to assert their views on the appropriate requirements for professional knowledge and experience in MiFID II. We found that, following the stakeholder consultation, the European Securities and Markets Authority (ESMA) opted for a minimum harmonization approach at the EU level. At the same time, ESMA also supported giving the respective national competent authorities sufficient remit to issue additional requirements in accordance with national laws and regulatory practices. Our article demonstrates that while public consultations provide rich evidence for the policy making process, they also contribute to the lasting politicization of regulatory decisions.

The Quest for Financial Stability: Determinants of Regulatory Approach in Banking Supervision

Effective banking supervision is important for ensuring financial sector stability. A country’s choice of banking sector regulatory approach has an impact on banks’ lending decisions and the overall availability of credit in the financial system (Greenwald and Stiglitz 2003: 5–8). Market-based regulation was prevalent in the decades leading up to the 2008 global financial crisis. This approach is based on the assumption that if sufficient information is available on the marketplace, market discipline will force financial actors to behave responsibly, and will thus promote financial stability (Barth et al. 2006; Wymeersch 2009; de Haan et al. 2012). However, reliance on market regulation allowed excessive risk-taking in the financial sector and destabilized the global financial system. Recently, scholars and policy-makers have considered the potential of implementing counter-cyclical regulatory measures to make the financial sector more resilient (Griffith-Jones et al. 2009; Independent Commission on Banking 2011). Proponents of counter-cyclical regulation argue that bank supervisors need to take pro-active measures when they observe vulnerabilities in the banking system, especially to cool off credit booms (Grabel 2007; Goodhart and Persaud 2008).