Sebastian Brück & Laixiang Sun :
044_DP61 Achieving Effective Governance under Divided Government and Private Interest Group Pressure: Taiwan’s 2001 Financial Holding Company Law
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Abstract:
In recent years, the division of Taiwan’s government between a DPP-led executive and opposition-dominated legislature has led to rather inefficient policy-making. This problem has been exacerbated by the increasing involvement of interest groups in the island’s legislative process. Drawing on the case of the 2001 Financial Holding Company Law, this paper examines the conditions under which effective governance can still be achieved in Taiwan. The law, which allowed commercial banks, investment banks and insurance companies to be integrated within one legal entity, had been devised by the Chen administration to address Taiwan’s most severe banking crisis in decades. Analyzing its adoption process shows that concerted media pressure can succeed in forcing Taiwan’s major parties to jointly pursue beneficial legislation. Furthermore, the paper argues that interest group involvement in Taiwanese policy-making does not necessarily lead to crippling regulatory capture but, on the contrary, can entail welfare enhancing change.
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