For all those Cats having difficulty sleeping – my good friend Chris Berg has posted his PhD thesis online.
From the abstract:
Between the 1890s and 2008 the Australian system of prudential regulation of banking went from an almost entirely unregulated free banking system to a system where prudential regulation was both heavy and thorough. Yet there has been no general study of the trajectory of prudential regulation in Australian history. From the crash of 1893 to the global financial crisis (GFC) of 2008, the safety and soundness of Australian banks has been a window through which Australians have conceptualised the state’s involvement in the economy. This thesis attempts to provide that study. It does so at a time when the institutions of prudential regulation are subject to a great deal of policy and scholarly attention. A new understanding the origins and arc of prudential policy over time should inform that discussion.
The thesis provides an institutional perspective on the development and evolution of prudential regulation in Australia. Djankov, Glaeser, et al. (2003) provide a framework whereby institutional arrangements can be compared both between economic systems and over time. My concern is to understand the factors which lead to institutional variation by reference to economic theories of public policy formation: public interest, private interest, and ideology. The thesis is able to adjust our understanding of the relationships between these factors and their historical contingencies. The thesis modifies and integrates these two frameworks, offering a significant theoretical advance in institutional economics titled “subjective political economy”.
The thesis also makes a number of significant contributions to knowledge about the history of Australian banking and NBFIs and Australian economic reform more generally. First, it sheds new light on the origins of the Australian bank deposit scheme. Second, it reorientates our understanding of the source of financial regulatory change in the 1980s by seeing it as the result of an ideological contest between the Whitlam and Fraser governments. Third, the thesis provides the first account of Australia’s involvement and integration with the Basel Committee on Banking Supervision between 1974 and 1988. Fourth, the thesis offers a reinterpretation of the development of prudential regulation in the 1980s, focusing on the formalisation of prudential controls which were brought on by the introduction of foreign banks and the consequent end of informal, cooperative regulatory relationships. By bringing the Basel adoption and prudential regulatory changes to the front of any account of the period of financial regulatory reform, we can see how the reform movement was characterised less by ‘deregulation’ and more by regulatory evolution and expansion.
In all seriousness it is a magnificent piece of work and people with an interest in financial history and/or prudential regulation should have a read.