The politics of financial services regulation and supervision reform in the European Union

The regulation and supervision of financial services in the European Union (EU) has undergone major reform between 1999 and 2004. This policy evolution is theoretically interesting, raising the question of which conceptual approaches better explain it, and it is also empirically relevant because it is an area of intense EU activity. This article provides a theoretically informed and empirically grounded explanation of the policy reform by evaluating the analytical leverage of three integration theories, mainly by relying on two methods – process tracing and congruence procedure – employing a variety of primary and secondary sources. It is argued that sequencing different theoretical approaches – interdependence , supranational governance and liberal intergovernmentalism – explains the various stages of the policy‐making process – namely, background‐setting, agenda‐setting and decision making, as well as the main features of the outcome.