TY - JOUR
T1 - Conflicts, interest groups, and politics in structural reforms
AU - Ben-Bassat, Avi
PY - 2011/11
Y1 - 2011/11
N2 - The present study is, to my knowledge, the first to examine the balance of power among all players influencing the adoption of structural reforms: politicians, regulators, and interest groups. Special attention is devoted to the effect of conflicts between regulators. Professional conflicts signal to politicians that there is a high level of risk in implementing a given reform, thereby weakening their confidence in it. Conflicts also benefit interest groups, increasing their effectiveness vis-à-vis politicians. Using a unique data set on 32 attempts to reform Israel's financial market, I find that the greater the extent of conflicts among regulators and the greater the intensity of the opposition of interest groups, the lower the probability that a reform will be approved. These conflicts, together with the strength of interest groups, have led to repeated attempts to introduce reforms, so that it takes, on average, 10 years for a reform to be adopted.
AB - The present study is, to my knowledge, the first to examine the balance of power among all players influencing the adoption of structural reforms: politicians, regulators, and interest groups. Special attention is devoted to the effect of conflicts between regulators. Professional conflicts signal to politicians that there is a high level of risk in implementing a given reform, thereby weakening their confidence in it. Conflicts also benefit interest groups, increasing their effectiveness vis-à-vis politicians. Using a unique data set on 32 attempts to reform Israel's financial market, I find that the greater the extent of conflicts among regulators and the greater the intensity of the opposition of interest groups, the lower the probability that a reform will be approved. These conflicts, together with the strength of interest groups, have led to repeated attempts to introduce reforms, so that it takes, on average, 10 years for a reform to be adopted.
UR - http://www.scopus.com/inward/record.url?scp=84862319425&partnerID=8YFLogxK
U2 - 10.1086/658672
DO - 10.1086/658672
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AN - SCOPUS:84862319425
SN - 0022-2186
VL - 54
SP - 937
EP - 952
JO - Journal of Law and Economics
JF - Journal of Law and Economics
IS - 4
ER -