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Exogenous Shocks in Subsystem Adjustment and Policy Change: The Credit Crunch and Canadian Banking Regulation

Published online by Cambridge University Press:  01 April 2009

RUSSELL ALAN WILLIAMS
RUSSELL ALAN WILLIAMS
Affiliation:
Department of Political Science Memorial University of Newfoundland St. John’s NL, Canada, A1B 3X9 Phone: 709–737–4402 Fax: 09–737–4000 E-mail: russellw@mun.ca
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Abstract

This paper explores the impact of internationalization on the financial services policy subsystem in Canada. It uses subsystem adjustment as a concept to bring some analytical clarity to how exogenous factors like globalisation and international crises may impact existing policy regimes. Based on examination of globalisation-induced banking deregulation (1987–1991) and the current crisis of securitized banking, the paper argues that the strength of this approach is that it integrates endogenous effects of the existing subsystem in explaining policy changes in response to what are normally treated as exogenous shocks. Careful effort needs to be made to differentiate the processes of external systemic perturbations from subsystem spillovers as these two processes of adjustment and policy change can lead to different policymaking dynamics over the long term.

Keywords

Financial Services RegulationSubsystem AdjustmentBankingGlobalisationCanada
Type
Research Article
Information
Journal of Public Policy , Volume 29 , Issue 1 , April 2009 , pp. 29 - 53
Copyright
Copyright © Cambridge University Press 2009

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