The Durability of Financial Reform: Legal Form and the 2008 Crisis Response in the United States, United Kingdom and India

The 2008 financial crisis generated a wave of constraints on financial firms across major jurisdictions, adopted with unusual speed and in several instances with unusual scope. However, what has persisted in the years since is far less uniform. This paper tests whether the legal form in which a reform is encoded, meaning the level of political authority required to alter a given parameter of it, predicts that reform's durability more reliably than the speed of its adoption or the scale of the change it imposed.

Nine reforms adopted in the United States, the United Kingdom and India are examined, producing twenty-seven parameter-level observations, each reform coded for scope, stringency and enforcement at its point of full legal effect.

Legal form is the most consistent predictor of the three examined. Parameters set in statute persisted through years of sustained political pressure and yielded only to instruments of equal standing, while parameters left to regulatory or administrative discretion loosened readily across all three jurisdictions regardless of how quickly a reform was adopted or how far it originally reached. Neither the speed of a reform's adoption nor the scale of the constraint it initially imposed discriminates among the outcomes observed. The paper concludes that a reform's legal architecture, rather than the urgency or ambition behind it, is what ultimately determines durability.