How nature of regulation and levels of trust affect each other over time: the case of financial regulation in the EU

Projektinformationen

REGTRUST

ID Finanzhilfevereinbarung: 101026008

DOI

10.3030/101026008

Projekt abgeschlossen

EK-Unterschriftsdatum 9 April 2021

Startdatum 1 September 2022

Enddatum 30 November 2024

Finanziert unter

• EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions

Gesamtkosten

€ 166 320,00

EU-Beitrag

€ 166 320,00

Koordiniert durch

UNIVERSITEIT ANTWERPEN
Belgium

Periodic Reporting for period 1 - REGTRUST (How nature of regulation and levels of trust affect each other over time: the case of financial regulation in the EU)

Berichtszeitraum: 2022-09-01 bis 2024-08-31

Zusammenfassung vom Kontext und den Gesamtzielen des Projekts

Trust in financial regulation is essential for the stability of markets, investor confidence, and the protection of consumers. However, trust in financial institutions and regulators was severely shaken following the 2008 financial crisis and subsequent eurozone crisis. Policymakers introduced a range of regulatory reforms, but a fundamental question remained: How does the nature of financial regulation influence trust over time, and how does trust (or distrust) shape regulation in return?

The REGTRUST project investigated this complex, two-way relationship by examining financial regulation in the EU before and after the crises. It sought to answer three key questions:

1. How has EU financial regulation evolved in its design and implementation?
2. How do different types of financial regulation impact trust levels among key stakeholders—policymakers, regulators, businesses, and consumers?
3. What regulatory mechanisms can repair trust even after a major breakdown?

Arbeit, die ab Beginn des Projekts bis zum Ende des durch den Bericht erfassten Berichtszeitraums geleistet wurde, und die wichtigsten bis dahin erzielten Ergebnisse

The project used a mixed-methods approach, combining quantitative text analysis, surveys, and qualitative case studies to map regulatory changes and their trust-related consequences.

Main Achievements:
- Mapped regulatory characteristics across key dimensions by analyzing EU financial rules, including their prescriptiveness and adaptability.
- Developed new indicators for measuring regulatory stringency and flexibility through computational text analysis.
- Examined correlations between regulatory types and trust/distrust levels, leveraging survey data from the EU-funded TiGRE project.
- Applied qualitative methods (case studies and process tracing) to uncover the causal links between regulatory shifts and changes in trust.
- Engaged in policy discussions to inform decision-makers on how regulation can be designed to restore trust.

Dissemination and Impact:
The findings have been widely disseminated through:
- Academic publications, most notably a special issue on trust and regulation in a major journal (Regulation & Governance).
- Workshops and conferences, including events at the European University Institute (EUI).
- Stakeholder engagement, with presentations not only to academics but also to policymakers, regulators, and financial sector actors.

Fortschritte, die über den aktuellen Stand der Technik hinausgehen und voraussichtliche potenzielle Auswirkungen (einschließlich der bis dato erzielten sozioökonomischen Auswirkungen und weiter gefassten gesellschaftlichen Auswirkungen des Projekts)

The REGTRUST project makes several contributions to academic research and policy practice:
- New Insights on Trust and Regulation: The project provides empirical evidence on how regulatory design affects trust in governance, even after major crises.
- Innovative Quantitative Measures: It introduces novel ways to assess regulatory prescriptiveness and adaptability using computational text analysis.
- Guidance for Policymakers: By identifying how regulation can help rebuild trust, the project offers recommendations for EU institutions and national regulators.
- Broader Societal Implications: Trust in financial governance is not just about market stability—it affects economic growth, investor confidence, and consumer protection.

Looking Ahead: Future Research and Impact
While REGTRUST focused on financial regulation, its findings have broader relevance. Future research will explore how similar trust-regulation dynamics play out in other sectors, such as Big Tech regulation and climate policy. A policy brief summarizing the project’s insights will be developed to further engage with decision-makers.

By shedding light on the crucial relationship between regulation and trust, REGTRUST contributes to better governance, more resilient regulatory systems, and a stronger foundation for public confidence in institutions.

Trust & Regulation

Trust & Regulation in Finance