Economics at your fingertips  

Lobbying and Enforcement: Theory and Application to Bank Regulation

Panagiota Papadimitri and Ansgar Wohlschlegel
Additional contact information
Panagiota Papadimitri: University of Portsmouth

No 2020-01, Working Papers from Swansea University, School of Management

Abstract: We suggest a novel explanation for lobbying in the context of enforcement. Offenders may lobby to communicate some private information, which may allow enforcement agents to focus their enforcement effort on investigating those individuals whose offending would be particularly harmful for society. Our model shows that, if the enforcement agent’s objective is to maximise social welfare, the availability of lobbying can never reduce welfare in equilibrium. In the special case of the social value of an offense being aligned with the offender’s private benefit, it will be the least socially harmful potential offenders who escape investigation and punishment because of lobbying, whereas a medium range of types will commit the offense but not lobby. However, if enforcement is delegated to a self-interested agent, lobbying may reduce welfare, as the enforcement agent induces the ’wrong’, intermediate types of offenders to lobby whereas the least harmful types of offenders commit an offense without lobbying. We briefly discuss applying the model to bank regulation and show that evidence from regulatory enforcement actions against banks in the US is in line with the first of these model versions."

Keywords: Lobbying; enforcement; bank regulation (search for similar items in EconPapers)
JEL-codes: D72 K42 G28 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2020-12-18
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) First version, 2020 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Swansea University, School of Management Contact information at EDIRC.
Bibliographic data for series maintained by Syed Shabi-Ul-Hassan ().

Page updated 2021-04-10
Handle: RePEc:swn:wpaper:2020-01