Aljarallah, Mohamed (2021) The structure and operations of financial regulatory and supervisory authorities. (PhD thesis), Kingston University, .
Abstract
Finance is an industry that needs to be regulated and supervised continuously to protect the interests of all its stakeholders. To do so, financial regulatory and supervisory organisations have been set up on the regional, national and international levels. On each level, these organisations support and guide the financial industry and protect its stakeholders. In order to deliver regulatory and supervisory services successfully, financial regulatory and supervisory organisations require a stable organisational structure and systematic operations. This research hence aims to deliver three key objectives. The first objective is to critically analyse the factors that have an impact on the structure of a financial organisation. The second is to identify and analyse the factors that influence the operations of a financial regulatory and supervisory organisation. The third and final objective is to investigate how international standards and enhance cross-border cooperation can be harmonising for the purposes of international financial regulatory authorities. To conduct this research, a qualitative approach to data collection was undertaken by conducting semi-structured interviews. The data was collected from a group of 44 participants, all senior financial regulators from across the globe. Of these, 21 participants came from developed economies, while 16 were from developing economies and seven from international regulatory bodies. The data was then analysed using a thematic analysis approach to examine the findings from the information given by the respondents. The data analysis identified five global themes and 13 organisational themes which were used to evaluate the factors affecting the structure and operations of the financial regulatory and supervisory organisations represented by the respondents. In addition, the themes identified were also used to evaluate the factors and barriers that directly impact upon international financial regulations. The study revealed that the structures of both financial regulatory and supervisory organisations are directly affected by external factors such as politicians, public opinions, market trends and market developments. The findings indicate that radical events, such as financial crises, typically lead to structural and operational changes within financial regulatory and supervisory organisations. The research also revealed that human culture and behaviour impact significantly upon the operations of bothnational and international financial regulatory and supervisory organisations. In terms of operation and structure of international financial regulatory organisations, the research found that a lack of communication, competition and accountability are major factors that hinder the effective application of financial regulatory and supervisory policies. Based on the findings of the study, the researcher suggests that before establishing a structure of financial regulatory authority, the founders should establish clear objectives. They should determine how the authority can be integrated into the existing national or international scenario, endeavour to limit the impact of external influences and then work to promote internal development. In terms of the operations of financial regulatory and supervisory organisations, the research here has emphasised the role and importance of human and cultural aspects of each respective country. Here, the study highlights these factors and recommends the policies that should be put in place to protect the cultural beliefs, norms and bias of each group. In order to harmonise operations between international and national financial regulatory authorities, it is further recommended that these organisations take into account the differences between legal and cultural traditions. These differences apply across their respective regions entailing that these organisations should aim to be independent of political influence and power. Overall, the research delivers an understanding of the factors that affect the structure and operations of financial regulatory and supervisory organisations. It proposes recommendations that can be adopted by these organisation, to help reduce the redundancy of work and encourage increasing cooperation and harmony between the various organisations that govern and supervise the financial industry, both at the national and international level.
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