A double-edged sword: The conditional properties of elite network ties in the financial sector
Abstract
Existing scholarship suggests a deep relationship between elite connections and policy making in the financial sector. But are elite ties between private industry and government a resource for private industry, or a liability? We find that they can be either, depending on the circumstances. We analyze the associations of elite ties within numerous policy-making processes in the financial sector by measuring the network closeness between firms and government regulators. We then relate these measures of network closeness to a range of actual regulatory outcomes, from highly politicized bank bailouts to meetings with regulators both in crisis environments and in more detailed technocratic policy-making. Our findings point to the importance of institutional context in differentiating the role that elite ties might play in different circumstances. Within financial regulatory policy-making, while social ties between firms and regulators matter, they matter in different ways within different institutional contexts.
Get full access to this article
View all access and purchase options for this article.
References
Acemoglu D, Johnson S, Kermani A, et al. (2010) Harvard Business School. http://www.hbs.edu/units/finance/pdf/Value of Political Connections Dec 7 2010 v2.pdf.
Acemoglu D, Johnson S, Kermani A, et al. (2016) The value of connections in turbulent times: Evidence from the United States. Journal of Financial Economics 121: 368–391.
Aitken R (2015) Fringe Finance: Crossing and Contesting the Borders of Global Capital. London: Routledge.
Alba R, Kadushin C (1976) The intersection of social circles: A new measure of proximity in networks. Sociological Methods and Research 5: 77–102.
Baker A (2010) Restraining regulatory capture? Anglo America, crisis politics and trajectories of change in global financial governance. International Affairs 86(3): 647–664.
Ban C, Leonard S, Sarah F (2016) Grey matter in shadow banking: International organizations and expert strategies in global financial governance. Review of International Political Economy 23(6): 1001–1033.
Barnes R (2017) Structural redundancy and multiplicity within networks of US corporate directors. Critical Sociology 43(1): 37–57.
Bauerle-Danzman S, Kindred Winecoff W, Oatley T (2017) All crises are global: Capital cycles in an imbalanced international political economy. International Studies Quarterly 61(4): 907–923.
Beaverstock J (2018) New insights in reproducing transnational corporate elites: The labour market intermediation of executive search in the pursuit of global talent in Singapore. Global Networks 18: 500–522.
Beaverstock J, James F, Sarah H (2015) The Globalization of Executive Search. London: Routledge.
Beaverstock J, Hall S, Wainwright T (2013) Servicing the super-rich: New financial elites and the rise of the private wealth management retail ecology. Regional Studies 47(6): 834–849.
Blau BM, Brough TJ, Thomas DW (2013) Corporate lobbying, political connections, and the bailout of banks. Journal Banking & Finance 37: 3007–3017.
Bourdieu P (1996) The State Nobility: Elite Schools in the Field of Power. Stanford: Stanford University Press.
Brandeis L (1914) Other People’s Money and How the Bankers Use It. New York: Bedford/Saint Martin’s.
Brezis ES, Cariolle J. (2014). The revolving door indicator: Estimating the distortionary power of the revolving door. No. 2014–13. Working Papers, Bar-Ilan University, Department of Economics, 2014.
Broughton PD (2009) Ahead of the Curve: Two Years at Harvard Business School. New York: Penguin.
Chalmers A (2015) Financial industry mobilization and securities markets regulation in Europe. European Journal of Political Research 54(3): 482–501.
Chalmers A (2017) When banks lobby: The effects of national banking regulations on international bank lobbying. Business and Politics 19(1): 107–134.
Chalmers A, Young K (2020) Network effects in the formation of the financial industry’s regulatory preferences in the European Union. Business and Politics 22(1): 52–84.
Christophers B (2016) Geographies of finance III: Regulation and ‘after-crisis’ financial futures. Progress in Human Geography 40(1): 138–148.
Christopoulos, Dimitrios C and Quaglia, Lucia (2009) Network Constraints in EU Banking Regulation: The Capital Requirements Directive. Journal of Public Policy 29(2): 179–200.
Comet C (2019) How does the inner circle shape the policy-planning network in France. Socio-Economic Review 17(4): 1021–1041.
Cousin B, Chauvin S (2021) Is there a global super-bourgeoisie? Sociology Compass 15(6): 1–15.
Cousin B, Khan S, Mears A (2018) Theoretical and methodological pathways for research on elites. Socio-Economic Review 16(2): 225–249.
Cronin B (2011) Networks of corporate power revisited. Procedia 10: 43–51.
Culpepper PD, Reinke R (2014) Structural power and bank bailouts in the United States and the United Kingdom. Politics and Society 42(4): 427–454.
Culpepper P (2015) Structural power and political science in the post-crisis era. Business and Politics 17(3): 391–409.
Davies W (2017) Elite power under advanced neoliberalism. Theory, Culture and Society 34(5–6): 227–250.
Davis A, Williams K (2017) Introduction: Elites and power after financialization. Theory, Culture and Society 34(5–6): 3–26.
Domhoff GW (1975) Social clubs, policy-planning groups, and corporations: A network study of ruling-class cohesiveness. Insurgent Sociologist 5(3): 171–184.
Duchin R, Sosyura D (2012) The politics of government investment. Journal of Financial Economics 106: 24–48.
Ellersgaard CH, Larsen AG, Munk MD (2013) A very economic elite: The case of the Danish top CEOs. Sociology 47(6): 1051–1071.
Engelen E (2015) Don’t mind the ‘funding gap’: What Dutch post crisis storytelling tells us about elite politics in financialized capitalism. Environment and Planning A: Economy and Space 47(8): 1606–1623.
Epstein G (2005) Introduction: Financialization and the world economy. In Gerald E (Ed.), Financialization and the World Economy. Northampton: Edward Elgar, 3–16.
Ferejohn, Jphn and Shipan, Charles (1990) Congressional Influence on Bureaucracy. Journal of Law, Economics, and Organization 6: 1–20.
Fichtner J (2017) Perpetual decline or persistent dominance? Uncovering Anglo-America’s true structural power in global finance. Review of International Studies 43(1): 3–28.
Froud J, Leaver A, Tampubolon G, et al. (2008) Everything for sale: How non-executive directors make a difference. Sociological Review 56(1): 162–186.
de Graaff N (2019) China Inc. Goes Global. The Transnational and National Networks of Chinese Firms and Business Elites. Review of International Political Economy 27(2): 208–233.
de Graaff, Nana and Valeeva, Diliara. 2021. Emerging Sino-European Corporate Elite Networks. Development and Change 52(5): 1147–1173.
Griffin P (2013) Gendering global finance. Men and Masculinities 16(1): 9–34.
Haberly D, Wójcik D (2020) The end of the great inversion: Offshore national banks and the global financial crisis. Journal of Economic Geography 20(6): 1263–1292.
Hall P (2003) Aligning Ontology and Methodology in Comparative Politics. In Mahoney J, Reuschemeyer D (Eds), Comparative Historical Analysis in the Social Sciences. New York: Cambridge University Press, 373–404.
Hall S (2019) Reframing labour market mobility in global finance: Chinese elites in London’s financial district. Urban Geography 40(5): 699–718.
Heemskerk E, Takes F (2016) The corporate elite community structure of global capitalism. New Political Economy 21(1): 90–118.
Heemskerk E, Fennema M, Carroll W (2016) The global corporate elite after the financial crisis: Evidence from the transnational network of interlocking directorates. Global Networks 16(1): 68–88.
Heemskerk, Eelke, Young, Kevin, Takes, Frank, et al. (2018) The promises and perils of using big data in the study of corporate networks: Problems, diagnostics and fixes. Global Networks 18(1): 3–32.
Hendrikse R, Meeteren Mv, Bassens D (2019) Strategic coupling between finance, technology and the state: Cultivating a Fintech ecosystem for incumbent finance. Environment and Planning A: Economy and Space 52(8): 1516–1538.
Henriksen LF, Seabrooke L (2021) Elites in transnational policy networks. Global Networks 21(2): 217–237.
Hilferding R (1910) Finance Capital: A Study of the Latest Phase of Capitalist Development (Das Finanzkapital. Eine Studie Uber Die Jungste Entwicklung Des Kapitalismus). Vienna: Wiener Volksbuchhandlung.
Hoang, Kimberly Kay (2015) Dealing in Desire: Asian Ascendancy, Western Decline, and the Hidden Currencies of Global Sex Work. Los Angeles: University of California Press.
Huijzer JM, Heemskerk E (2021) Delineating the corporate elite: Inquiring the boundaries and composition of interlocking directorate networks. Global Networks 21: 791–820.
Igan D, Mishra P (2011) Making friends. Finance and Development 48: 2.
Ioannou S, Wójcik D (2019) On financialization and its future. Environment and Planning A: Economy and Space 51(1): 263–271.
Khan SR (2012) The sociology of elites. Annual Review of Sociology 38: 361–377.
Kincses A, Toth G (2020) The geographical network of international migration. Environment and Planning A: Economy and Space 52(7): 1243–1245.
Larsen AG, Ellersgaard CH (2017) Identifying power elites: K-cores in heterogenous affiliation networks. Social Networks 50(7): 55–69.
Laumann E, Pappi F (1973) New directions in the study of community elites. American Sociological Review 38: 212–229.
Laumann E, Vergrugge LM, Pappi F (1974) A causal modeling approach to the study of a community elite’s influence structure. American Sociological Review 39: 162–174.
Lenin VI (1917) Imperialism, the Highest Stage of Capitalism. Leftist Public Domain Project.
Leyshon A, Burton D, Knights D, et al. (2004) Towards an ecology of retail financial services: Understanding the persistence of door-to-door credit and insurance providers. Environment and Planning A: Economy and Space 36(4): 625–645.
Li L (2013) TARP Funds distribution and bank loan supply. Journal of Banking & Finance 37: 4777–4792.
Liu X, Derudder B, Liu Y, et al. (2013) A stochastic actor-based modelling of the evolution of an intercity corporate network. Environment and Planning A: Economy and Space 45: 947–966.
Mader P, Mertons D, Van der Zwan N (Eds) (2020) The Routledge International Handbook of Financialization. London: Routledge.
Marple T, Desmarais B, Young KL. (2017) Collapsing corporate confusion: Leveraging network structures for effective entity resolution in relational corporate data. 2017 IEEE International Conference on Big Data. IEEE, 2017.
McPhilemy S (2013) Formal rules versus informal relationships: Prudential banking supervision at the FSA before the crash. New Political Economy 18(5): 748–767.
Mills, C. Wright (1956) The Power Elite. Oxford: Oxford University Press.
Neely MT (2022) Hedged Out: Inequality and Insecurity on Wall Street. Berkeley: University of California Press.
Nixon DC, Howard RM, DeWitt JR (2002) With friends like these: Rule-making comment submissions to the securities and exchange commission. Journal of Public Administration Research and Theory 12(1): 59–76.
Oatley T, Petrova B (2022) The Global Deregulation Hypothesis. Socio-Economic Review 20(2): 611–633.
Pagliari S and Young K (2014) Leveraged Interests: The Role of Corporate-Financial Coalitions in the Regulation of Finance. Review of International Political Economy 21(3): 575–610.
Pagliari S, Young K (2016) The interest ecology of financial regulation: Interest group plurality in the design of financial regulatory policies. Socio-Economic Review 14(2): 309–337.
Pagliari S, Young K (2019) How is Financialization Reproduced Politically? Approaches and Evidence from Recent Scholarship. In Philip M, Daniel M, van der Zwan N (Eds.) International Handbook of Financialization. London: Routledge.
Puente L (2012) Political influence and TARP: An analysis of treasury’s disposition of CPP warrants. Political Science and Politics 45(2): 211–217.
Quaglia L (2008) Setting the pace? Private financial interests and European financial market integration. British Journal of Politics and International Relations 10(1): 46–63.
Seabrooke L (2010) What do I get? The everyday politics of expectations and the subprime crisis. New Political Economy 15(1): 51–70.
Seabrooke L, Henriksen LF (Eds.) (2017) Professional Networks in Transnational Governance. Cambridge: Cambridge University Press.
Seabrooke L, Nilsson ER (2014) Professional skills in international financial surveillance: Assessing change in IMF policy teams. Governance 28(2): 237–254.
Seabrooke L, Tsingou E (2009) Power elites and everyday politics in international financial reform. International Political Sociology 3(4): 457–461.
Seabrooke L, Tsingou E (2021) Revolving doors in international financial governance. Global Networks 21(2): 294–319.
Shive SA, Forster MM (2016) The revolving door for financial regulators. Review of Finance 21(4): 1445–1484.
Stone D (2013) Shades of grey: The world bank, knowledge networks and linked ecologies of academic engagement. Global Networks 13(2): 241–260.
Tsingou E, Baker A, Seabrooke L (2016) Ideational Ecologies in Central Banking. mimeo, Department of Business and Politics. Copenhagen Business School.
Tsingou E (2015) Club governance and the making of global financial rules. Review of International Political Economy 22(2): 225–256.
Van Apeldoorn B, de Graaff N (2012) The limits of open door imperialism and the US state-capital Neus. Globalizations 9(4): 593–608.
Van Apeldoorn B, de Graaff N (2014) Corporate elite networks and US post-cold war grand strategy from Clinton to Obama. European Journal of International Relations 20(1): 29–55.
Van Der Pijl K, Yurchenko Y (2015) Neoliberal entrenchment of North Atlantic capital: From corporate self-regulation to state capture’. New Political Economy 20(4): 495–517.
Van der Zwan N (2014) Making sense of financialization. Socio-Economic Review 12(1): 99–112.
Wedel J (2007) Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government and the Free Market. New York: Basic Books.
Winecoff WK (2020) ‘The Persistent Myth of Lost Hegemony’ revisited: Structural power as a complex network phenomenon. European Journal of International Relations 26(S1): 209–252.
Wójcik D, Pažitka V, Knight E, et al. (2019) Investment banking centres since the global financial crisis: New typology, ranking and trends. Environment and Planning A: Economy and Space 51(3): 687–704.
Woll C (2013) Lobbying under pressure: The effect of salience on European Union hedge fund regulation. Journal of Common Market Studies 51(3): 555–572.
Woll C (2014) The Power of Inaction: Bank Bailouts in Comparative Perspective. Ithaca: Cornell University Press.
Young K (2012) Transnational regulatory capture? An empirical examination of the transnational lobbying of the Basel committee on banking supervision. Review of International Political Economy 19(4): 663–688.
Young K (2014) Financial industry groups’ adaptation to the post-crisis regulatory environment: Changing approaches to the policy cycle. Regulation and Governance 7(4): 460–480.
Young K, Marple T, Heilman J (2017) Beyond the revolving door: Advocacy behavior and social distance to financial regulators. Business and Politics 19(2): 327–364.
Young K, Pagliari S (2021) Lobbying to the rhythm of wall street? Explaining the political advocacy of non-financial corporations over financial regulatory policy. Socio-Economic Review 20(2): 659–685.
Young K, Yagci A (2019) Status quo conservatism, placation, or partisan division? Analysing citizen attitudes towards financial reform in the United States. New Political Economy 24(3): 313–333.
Cite article
Cite article
Cite article
OR
Download to reference manager
If you have citation software installed, you can download article citation data to the citation manager of your choice
Information, rights and permissions
Information
Published In
Article first published online: November 3, 2022
Issue published: June 2023
Keywords
Authors
Metrics and citations
Metrics
Journals metrics
This article was published in Environment and Planning A: Economy and Space.
View All Journal MetricsArticle usage*
Total views and downloads: 561
*Article usage tracking started in December 2016
Altmetric
See the impact this article is making through the number of times it’s been read, and the Altmetric Score.
Learn more about the Altmetric Scores
Articles citing this one
Receive email alerts when this article is cited
Web of Science: 1 view articles Opens in new tab
Crossref: 2
- Elite embeddedness: the rise of financiers on university boards as parallel social organizations
- The changing spatial arrangements of global finance: Financial, social and legal infrastructures
Figures and tables
Figures & Media
Tables
View Options
Access options
If you have access to journal content via a personal subscription, university, library, employer or society, select from the options below:
I am signed in as:
View my profileSign out
I can access personal subscriptions, purchases, paired institutional access and free tools such as favourite journals, email alerts and saved searches.
loading institutional access options
Alternatively, view purchase options below:
Purchase 24 hour online access to view and download content.
Access journal content via a DeepDyve subscription or find out more about this option.
