Governing Finance: East Asia's Adoption of International Standards(Cornell Studies in Money)

The international financial community blamed the Asian crisis of 1997–1998 on deep failures of domestic financial governance. To avoid similar crises in the future, this community adopted and promoted a set of international "best practice" standards of financial governance. The G7 asked specialized public and private sector bodies to set international standards, and tasked the International Monetary Fund and the World Bank with their global dissemination. Non-Western countries were thereby encouraged to emulate Western practices in banking and securities supervision, corporate governance, financial disclosure, and policy transparency. In Governing Finance, Andrew Walter explains why Indonesia, Malaysia, South Korea, and Thailand—key targets and test cases of this international standards project—were placed under intense pressure to transform their domestic financial governance. Walter finds that the depth of the economic crisis, and more enduring aspects of Asian capitalism, such as family ownership of firms, made substantive compliance with international standards very costly for the private sector and politically difficult for governments to achieve. In spite of international compliance pressure, the result was varying degrees of cosmetic or "mock" compliance. In a book containing lessons for any agency or country attempting to implement lasting change in financial governance, Walter emphasizes the limits of global regulatory convergence in the absence of support from domestic politicians, institutions, and firms.

About the Author :
Andrew Walter is Senior Lecturer in the Department of International Relations at the London School of Economics. He is the author of World Power and World Money: The Role of Hegemony in International Monetary Order.

Review :
"Walter does excellent work laying out the politico-economic dynamic by which governments navigate between the regulatory neoliberals and domestic pressure groups. One of his conclusions is that this push and pull results in compliance regimes that are highly variable and not likely to converge quickly, if at all, with the stated (and ever changing) ideal of Western-oriented multilateral agencies and Western governments."-Choice "Global finance can be a lightning rod for crisis and economic collapse. Some of the world's most powerful policymakers believe they can manage these risks by promoting 'international standards.' Andrew Walter's rigorous book demonstrates why they might be wrong. It is a must-read for students, scholars, and practitioners of global finance and regulation."-Ngaire Woods, Oxford University and author of The Globalizers: The IMF, the World Bank, and their Borrowers "Nearly everyone expected the Asian Crisis to foster massive reforms-but it did not. Walter brilliantly illuminates why 'mock compliance' with international financial standards took precedence over substantive change."-Gary Clyde Hufbauer, Reginald Jones Senior Fellow, Peterson Institute for International Economics "Andrew Walter's book highlights important differences between the appearance and substance of financial governance reforms in Asia. He also makes a valuable contribution to explaining how power and interest shape differential reform outcomes by placing domestic political forces at the heart of his analysis."-Garry Rodan, Director, Asia Research Centre, Murdoch University "Andrew Walter's Governing Finance introduces to the field of international financial regulation the extremely useful concept of 'mock compliance.' International financial markets are not so constraining that governments in developing countries don't pretend to comply with international regulations and standards. To the question of why international investors don't punish such governments with capital flight, Walter points out that international investors may be satisfied with mock compliance as long as they believe the government can and will bail out the local companies should the need arise. This book combines keen insight with a detailed account of international regulatory compliance-or lack thereof-in Thailand, Indonesia, Malaysia, and Korea."-Frances McCall Rosenbluth, Damon Wells Professor of Political Science, Yale University