The language of rules: textual complexity in banking reforms

Zahid Amadxarif (zahid.amadxarif@bankofengland.co.uk), James Brookes (james.brookes@bankofengland.co.uk), Nicola Garbarino, Rajan Patel (rajan.patel@bankofengland.co.uk) and Eryk Walczak
Additional contact information
Zahid Amadxarif: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
James Brookes: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Rajan Patel: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 834, Bank of England working papers from Bank of England

Abstract: The banking reforms that followed the financial crisis of 2007–08 led to an increase in UK banking regulation from almost 400,000 to over 720,000 words, and to concerns about their complexity. We define complexity in terms of the difficulty of processing linguistic units, both in isolation and within a broader context, and use natural language processing and network analysis to calculate complexity measures on a novel dataset that covers the near universe of prudential regulation for banks in the United Kingdom before (2007) and after (2017) the reforms. Linguistic, ie textual and network, complexity in banking regulation is concentrated in a relatively small number of provisions, and the post-crisis reforms have accentuated this feature. In particular, the comprehension of provisions within a tightly connected ‘core’ requires following long chains of cross-references.

Keywords: Complexity; CRR; natural language processing; networks; regulation; supervision (search for similar items in EconPapers)
JEL-codes: D85 E58 G18 G28 K23 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-10-24
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0834

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