Derivatives and Deregulation: Financial Innovation and the Demise of Glass–Steagall

Administrative Science Quarterly

Volumn 59, Issue 4, 2014, Pages 669-704

  Funk, Russell J ^a   Hirschman, Daniel ^b  

^a UNIVERSITY OF MINNESOTA   (United States)

^b UNIVERSITY OF MICHIGAN   (United States)

Author keywords

categorization; financial derivatives; foreign exchange swaps; innovation; institutional change; interest rate swaps; regulation

Indexed keywords

EID: 84908548670     PISSN: 00018392     EISSN: 19303815     Source Type: Journal    
DOI: 10.1177/0001839214554830     Document Type: Article

References (123)

1. Glass–Steagall action doubted. 1983a;:21
2. thrifts: Finance technique used for own portfolios, arranged for customers: ; 1983b:4.
3. Citi strengthens push into investment banking. 1983c;:17
4. Morgan Guaranty takes aim at Wall Street. 1983d;:8
5. Bankers Trust strives to be merchant banker. 1983e;:25
6. Should the Glass–Steagall Act be repealed? Two views. 1984;:8
7. Briefing: Playing on Glass–Steagall fears. 1987;:23
8. Court decision changes the landscape; new strength for lobby. 1988a;:10
9. New powers allowed by high court; appeal not heard; Fed ruling stands. 1988b;:14
10. Securities group to give some ground on opposition to Glass–Steagall repeal. 1989a;:30
11. Banks say no deal to SIA’s proposal, citing imbalances. 1989b;:5
12. Glass–Steagall reform imperiled by friends. 1995a;:3
13. Dismantling Glass–Steagall: Glass–Steagall repeal: Is it in the stars for banks at last?.”. 1995b;:20
14. Reform vote called off as Republicans battle CRA. 1998;:4
15. In focus: Financial reform bill’s latest snag could put it into intensive care. 1999;:12
16. Baumgartner F. R.,Berry J. M.,Hojnacki M.,Kimball D. C.,Leech B. L.Chicago: University of Chicago Press; 2009:
17. Berger A. N.,Kashyap A. K.,Scalise J. M.,Gertler M.,Friedman B. M.S. banking industry: What a long, strange trip it’s been.” Brookings Papers on Economic Activity; 1995:55-218.
18. Berk G.,Galvan D.,Hattam V.Philadelphia: University of Pennsylvania Press; 2013:
19. Beunza D.,Garud R.Calculators, lemmings or frame-makers? The intermediary role of securities analysts.Sociological Review. 2007;55:13-39
20. High drama at CFTC: The battle over swaps and futures. 2013a;:1
21. Traders take their swaps deals to futures exchanges. 2013b;:24
22. BushG. H. W.1992 “Statement on signing the Futures Trading Practices Act of 1992.” Available at http://www.presidency.ucsb.edu/ws/index.php?pid=21696.
23. Carnell R. S.,Macey J. R.,Miller G. P.The Law of Banking and Financial Institutions. 2008The Law of Banking and Financial Institutions, 4th ed.New York: Aspen.New York: Aspen; 2008:
24. Carpenter D.,Moss D. A.Cambridge: Cambridge University Press; 2013:
25. Carpenter D. H.,Murphy M. M.Permissible securities activities of commercial banks under the Glass–Steagall Act (GSA) and the Gramm–Leach–Bliley Act (GLBA).Congressional Research Service. 2010;:
26. Cohen H.The Glass–Steagall Act: A legal overview.Congressional Research Service. 1982;:
27. Daigler R. T.,Steelman D.Interest rate swaps and financial institutions.Paper presented at the annual meeting of the Southern Finance Association; 1988San Antonio, TX; 1988.
28. Davis G. F.Oxford: Oxford University Press; 2009:
29. Davis G. F.,Mizruchi M. S.The money center cannot hold: Commercial banks in the U.S. system of corporate governance.Administrative Science Quarterly. 1999;44:215-239
30. Derthick M.,Quirk P. J.Washington, DC: Brookings Institution; 1985:
31. Edelman L. B.,Krieger L. H.,Eliason S. R.,Albiston C. R.,Mellema V.When organizations rule: Judicial deference to institutionalized employment structures.American Journal of Sociology. 2011;117:888-954
32. Edelman L. B.,Uggen C.,Erlanger H. S.The endogeneity of legal regulation: Grievance procedures as rational myth.American Journal of Sociology. 1999;105:406-454
33. Eisenhardt K. M.,Graebner M. E.Theory building from cases: Opportunities and challenges.Academy of Management Journal. 2007;50:25-32
34. ” 52: ; 1987:022.
35. ” 54: ; 1989:694.
36. ” 61: ; 1996:750.
37. ” 63: ; 1998:114.
38. Washington, DC: U.S. Government Printing Office; 2011:
39. Finnerty J. D.Zero coupon bond arbitrage: An illustration of the regulatory dialectic at work.Financial Management. 1985;14:13-17
40. Fisher L.,Brick I. E.,Ng F. K. W.Tax incentives and financial innovation: The case of zero-coupon and other deep-discount corporate bonds.Financial Review. 1983;18:292-305
41. Frame W. S.,White L. J.Empirical studies of financial innovation: Lots of talk, little action?.” Journal of Economic Literature. 2004;42:116-144
42. Gande A.,Puri M.,Saunders A.Bank entry, competition, and the market for corporate securities underwriting.Journal of Financial Economics. 1999;54:165-195
43. Garland M. B.Deregulation and judicial review.Harvard Law Review. 1985;98:505-591
44. George A. L.,Bennett A.Cambridge, MA: MIT Press; 2005:
45. Goertz G.,Mahoney J.Princeton, NJ: Princeton University Press; 2012:
46. Grabowski H. G.,Vernon J. M.,Thomas L. G.Estimating the effects of regulation on innovation: An international comparative analysis of the pharmaceutical industry.Journal of Law and Economics. 1978;21:133-163
47. Grant C.Why treasurers are swapping.Euromoney. 1985;4:19-30
48. Gross N.,Medvetz T.,Russell R.The contemporary American conservative movement.Annual Review of Sociology. 2011;37:325-354
49. Hacker J. S.,Pierson P.New York: Simon & Schuster; 2010:
50. Hammond T. H.,Knott J. H.The deregulatory snowball: Explaining deregulation in the financial industry.Journal of Politics. 1988;50:3-30
51. Hargadon A. B.,Douglas Y.When innovations meet institutions: Edison and the design of the electric light.Administrative Science Quarterly. 2001;46:476-501
52. Hart D. M.‘Business’ is not an interest group: On the study of companies in American national politics.Annual Review of Political Science. 2004;7:47-69
53. Harvey D.Oxford: Oxford University Press; 2005:
54. Haveman H. A.Follow the leader: Mimetic isomorphism and entry into new markets.Administrative Science Quarterly. 1993a;38:593-627
55. Haveman H. A.Organizational size and change: Diversification in the savings and loan industry after deregulation.Administrative Science Quarterly. 1993b;38:20-50
56. Hazen T. L.Disparate regulatory schemes for parallel activities: Securities regulation, derivatives regulation, gambling, and insurance.Annual Review of Banking and Financial Law. 2005;24:375-442
57. Hillman A. J.,Hitt M. A.Corporate political strategy formulation: A model of approach, participation, and strategy decisions.Academy of Management Review. 1999;24:825-842
58. Hsu G.Jacks of all trades and masters of none: Audiences’ reactions to spanning genres in feature film production.Administrative Science Quarterly. 2006;51:420-450
59. Hsu G.,Hannan M. T.,Koçak Ö.Multiple category memberships in markets: An integrative theory and two empirical tests.American Sociological Review. 2009;74:150-169
60. Jaffe A. B.,Lerner J.Princeton, NJ: Princeton University Press; 2004:
61. Jaffe A. B.,Palmer K.Environmental regulation and innovation: A panel data study.Review of Economics and Statistics. 1997;79:610-619
62. Jick T. D.Mixing qualitative and quantitative methods: Triangulation in action.Administrative Science Quarterly. 1979;24:602-611
63. Kane E. J.Good intentions and unintended evil: The case against selective credit allocation.Journal of Money, Credit and Banking. 1977;9:55-69
64. Kane E. J.Accelerating inflation, technological innovation, and the decreasing effectiveness of banking regulation.Journal of Finance. 1981;36:355-367
65. Kim B. K.,Jensen M.How product order affects market identity repertoire ordering in the U.S. opera market.Administrative Science Quarterly. 2011;56:238-256
66. Klein L. B.Interest rate and currency swaps: Are they securities?.International Financial Law Review. 1986;5:35-40
67. Krippner G. R.Cambridge, MA: Harvard University Press; 2011:
68. Kwak J.Preventing Regulatory Capture. Carpenter D.Moss D., ed. Cambridge: Cambridge University Press; 2013:71-98.
69. Lynn D. M.Enforceability of over-the-counter financial derivatives.Business Lawyer. 1994;50:291-337
70. MacKenzie D.Cambridge, MA: MIT Press; 2006:
71. Mahoney J.The logic of process tracing tests in the social sciences.Sociological Methods and Research. 2012;41:570-597
72. Mahoney J.,Thelen K.Cambridge: Cambridge University Press; 2010:
73. Meier K. J.New York: St. Martin’s Press; 1985:
74. Miller M. H.Financial innovation: The last twenty years and the next.Journal of Financial and Quantitative Analysis. 1986;21:459-471
75. Mudge S. L.What is neo-liberalism?.” Socio-Economic Review. 2008;6:703-731
76. Negro G.,Hannan M. T.,Rao H.Categorical contrast and audience appeal: Niche width and critical success in winemaking.Industrial and Corporate Change. 2010;19:1397-1425
77. Bank target: Glass–Steagall Act. 1981;:3
78. Citicorp seeks broad securities role. 1984a;:28
79. Bankers trust seeks Fed backing for commercial paper unit. 1984b;:29
80. Citicorp, Morgan backed on underwriting. 1985;:31
81. Clinton signs legislation overhauling banking laws. 1999a;:13
82. A new financial era: The overview. 1999b;:13
83. New York Times DealBook2013 “Enforcing the Volcker Rule.” December11. Available at http://dealbook.nytimes.com/2013/12/11/morning-agenda-enforcing-the-volcker-rule/.
84. Olander C. D.,Spell C. L.Interest rate swaps: Status under federal tax and securities laws.Maryland Law Review. 1986;45:21-60
85. Omarova S. T.The quiet metamorphosis: How derivatives changed the ‘business of banking.’” University of Miami Law Review. 2009;63:1041-1205
86. The warning: Interview with Brooksley Born. 2009;:20
87. Perino M.New York: Penguin Press; 2010:
88. Perkins E. J.The divorce of commercial and investment banking: A history.Banking Law Journal. 1971;88:483-528
89. Pontikes E. G.Two sides of the same coin: How ambiguous classification affects multiple audiences’ evaluations.Administrative Science Quarterly. 2012;57:81-118
90. Prasad M.Chicago: University of Chicago Press; 2006:
91. Price J. A.,Henderson S. K.London: Butterworths; 1984:
92. Rao H.,Monin P.,Durand R.Border crossing: Bricolage and the erosion of categorical boundaries in French gastronomy.American Sociological Review. 2005;70:968-991
93. Romano R.A thumbnail sketch of derivative securities and their regulation.Maryland Law Review. 1996;55:1-83
94. Ruef M.,Patterson K.Credit and classification: The impact of industry boundaries in nineteenth-century America.Administrative Science Quarterly. 2009;54:486-520
95. Russo M. V.exchange relations, and the emergence of new fields: Regulatory policies and independent power production in America, 1978–1992.” Administrative Science Quarterly; 2001:57-86.
96. Russo T. A.,Vinciguerra M.Financial innovation and uncertain regulation: Selected issues regarding new product development.Texas Law Review. 1990;69:1431-1538
97. Sercu P.Princeton, NJ: Princeton University Press; 2009:
98. Sine W. D.,Haveman H. A.,Tolbert P. S.Risky business? Entrepreneurship in the new independent-power sector.Administrative Science Quarterly. 2005;50:200-232
99. Smith C. W.,Smithson C. W.,Wakeman L. M.The evolving market for swaps.Midland Corporate Finance Journal. 1986;3:20-32
100. Smith E. B.Identities as lenses: How organizational identity affects audiences’ evaluation of organizational performance.Administrative Science Quarterly. 2011;56:61-94
101. Steinherr A.Derivatives: The Wild Beast of Finance: A Path to Effective Globalisation?. New York: Wiley; 2000:
102. Stout L. A.Why the law hates speculators: Regulation and private ordering in the market for OTC derivatives.Duke Law Journal. 1999;48:701-786
103. Streeck W.,Thelen K.Oxford: Oxford University Press; 2005:
104. Suárez S.,Kolodny R.Paving the road to ‘Too Big to Fail’: Business interests and the politics of financial deregulation in the United States.Politics and Society. 2011;39:74-102
105. Taylor M. R.,Rubin E. S.,Hounshell D. A.Regulation as the mother of innovation: The case of SO2 control.Law and Policy. 2005;27:348-378
106. Tett G.Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe. New York: Free Press; 2009:
107. Tufano P.Handbook of the Economics of Finance. Constantinides G. M.Harris M.Stulz R. M., ed. Amsterdam: Elsevier; 2003:307-335.
108. Technology and banking.Subcommittee on Capital Markets, Securities, and Government Sponsored Enterprises of the House Committee on Banking and Financial Services. 1999;:25
109. ” Washington, DC: U.S. Government Printing Office; 1994:
110. Wall L. D.,Pringle J. J.Alternative explanations of interest rate swaps: A theoretical and empirical analysis.Financial Management. 1989;18:59-73
111. Investment banking’s changing face. 1984;:3
112. SEC proposes disclosure requirements for certain repurchase agreements. 1985;:28
113. FASB begins project that could alter accounting rules on some borrowings. 1986a;:16
114. Freer finance: U.S. regulators move to let banks enter several new businesses. 1986b;:29
115. Dealers design a standard contract for swaps of interest rates, currencies. 1987;:4
116. Changes in banking bill are pushed to boost the SEC’s regulatory power. 1991a;:9
117. Merrill sets up unit to cash in on derivatives. 1991b;:12
118. Credit Crisis Cassandra. 2009;:26
119. Watson M.Washington, DC: International Monetary Fund; 1986:
120. Wilmarth A. E.The dark side of universal banking: Financial conglomerates and the origins of the subprime financial crisis.Connecticut Law Review. 2009;41:963-1050
121. Zorn D. M.Here a chief, there a chief: The rise of the CFO in the American firm.American Sociological Review. 2004;69:345-364
122. Zuckerman E. W.The categorical imperative: Securities analysts and the illegitimacy discount.American Journal of Sociology. 1999;104:1398-1438
123. Zuckerman E. W.,Kim T.-Y.,Ukanwa K.,von Rittmann J.Robust identities or nonentities? Typecasting in the feature-film labor market.American Journal of Sociology. 2003;108:1018-1073