Regulatory Capture and its Consequences

This assignment delves into the phenomenon of regulatory capture, where regulatory bodies prioritize the interests of industries they oversee over the public good. The analysis draws upon various scholarly sources to explain how regulatory capture undermines protectionist standards and potentially compromises financial stability. It also examines the influence of excessive regulation on organizational profitability and the delicate balance between enforcing regulations and accommodating industry needs.

LITERATURE REVIEW

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A Comparison of regulatory environment of United kingdom ad India..........................1
PART B Analysis of each environment using Capture theory...................................................3
REFERENCES................................................................................................................................5

INTRODUCTION
Literature review is one of the essential part in the research study by which researcher
can collect the information about the subject. With help of this section, scholar can get the detail
knowledge and understanding about the subject. In this chapter, researcher includes several
themes about the subject through which effective understanding can develop. In addition to this,
in this section various views and opinion of the authors regarding the subject can also include in
this aspect (Neubauer and Fradella,2018). The current literature review is based on the regulatory
environment of the India and United kingdom. With help of this study, researcher can collect the
data about the regulatory environment and analysis of this environment with respect of Capture
theory.
PART A Comparison of regulatory environment of United kingdom ad India
As per the perspective of Trad and Kalpić, (2018) Regulatory condition assumes an
exceptionally essential part in each nation by which some enactment, arrangements, rules,
practices can create by the legislature. With help of amazing administrative condition, subjects
can securely live inside a nation and do their working in more secure and safe way. It is essential
for government in each nation to build up the administrative framework in more compelling and
effective way so as association can complete their working in more fantastic way. In India,
administrative condition is not the same as alternate nations. As indicated by the perspective of
Guerrina and Masselot (2018) A fitting segment technique is an outright need for each outside
theorist endeavoring to cooperate in India or with counterparties arranged in India. Entry strategy
would as a general rule move dependent upon the possibility of business, the concerned part, size
of assignments and costs and different business targets. Broadly, remote money related masters
can set up either an association, branch/contact office or a compelled commitment affiliation
(LLP) in India. Indian associations are directed by the new association law, the Companies Act,
2013. LLPs are controlled by an alternate order, the Limited Liability Partnership Act, 2008. It
may be raised that the Indian government has moved a movement of exercises went for
enhancing the straightforwardness of cooperating in India. Outside theories into India are
managed by a broad remote direct wander (FDI) game plan issued consistently by the
Department of Industrial Policy and Promotion, which works under the aegis of the Ministry of
Commerce and Industry, Government of India. On the contradicting view Kolasa, (2018)
stated that in the united kingdom, the regulatory environment is different from the India. In the
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united kingdom there is major three legal systems and every one applied on the specific
geographical area. The united kingdom does not have a single legal system because it is created
by the political union of previously independent countries. In the United kingdom, court
structure of English legitimate framework covers Wales and England. English legitimate
framework has various leveled structure. Incomparable court is situated at the highest point of
chain of importance. The choice made by this court must be trailed by every single other court in
the nation and the incomparable court is likewise perceived as House of Lords as this court has
energy to settle on real choices. The preeminent court is just bound by its own particular choices
taken in past cases. The interest court is situated after the preeminent court in the structure. The
choice made by the two courts are to be trailed by the lower courts. If there should be an
occurrence of conflictual condition between the past choices, the incomparable court has the
expert to settle on conclusion identified with which choice to be made official or to be overruled.
At the point when the current choice has been overruled by the preeminent court, at that point in
such circumstance, it is required by claim court to consent to the conclusion made by the
predominant court. The structure of English legitimate framework is partitioned into two: that is
Criminal and Civil division. Divisional courts are set up in the three noteworthy divisions of
High court. In various leveled structure, over the high court there are divisional courts. The
choice, guidelines or standards made by the divisional courts are to be trailed by the high court
when fathoming the normal cases. Crown court is situated alongside the high court and these
councils are limited by choice made by their prevalent court. At the lower level of the chain of
importance, there is brings down courts. The FDI system is supplemented by various press saw
that are issued amid the time as and when an approach change is announced. This system
structure is operational by standards, bearings and handouts issued by India's Central Bank, the
Reserve Bank of India. As per the perspective of Guerrina and Masselot, (2018) Salary evaluate
in India is managed by a Central establishment, the (Indian) Income force Act, 1961, while
meandering costs, for instance, regard included cost, conventions and concentrate commitment
are at risk to both Central and State laws. At the present time the corporate obligation rate stays
at 30% (excepting extra charge and cess), in any case, the Government has proclaimed this
would be powerfully reduced to 25% all through the accompanying 4 years. India furthermore
has trade esteeming chooses that apply to related assembling trades. On the atypical obligations
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front, a broad Goods and Services Tax (GST) is most likely going to be introduced in India in
2016. This will go far in diminishing diserse quality and taking out various assessment gathering.
PART B Analysis of each environment using Capture theory
As per the perspective of Teti, Abbott and Cavatorta, (2018) administrative catch is an
office which is made to ensure the buyer however prove proposes every single administrative
body fall prey to administrative catch. This is extremely viable hypothesis so as to comprehend
and break down the administrative condition inside the nation. This hypothesis is presented by
the George Strigler that expressed that any association in the nation is to a great extent useful
from the law and enactment. By utilization of the enactment, association can safely complete
their working and exercises inside the nation. It helps to give insurance and security to the
organizations inside an association. It is the method by which administrative organizations in the
end come to be commanded by the very ventures they were accused of administrative. By
utilization of this hypothesis it has been broke down that in the unified kingdom, English true
blue system has different leveled structure. Exceptional court is arranged at the most astounding
purpose of chain of significance. The overwhelming court is simply bound by its own specific
decisions taken in past cases. The intrigue court is arranged after the transcendent court in the
structure. The structure of English authentic system is apportioned into two: that is Criminal and
Civil division. By utilization of this enactment and law, no individual and subject in the nation
can cheat and fruad with somebody. With help of this enactment, individual can get their rights
inside the nation. By help of the direction and enactment, each one can use their rights and exact
inside the nation and live with full security and wellbeing In the conclusion of Fletcher, (2018).
The Capture hypothesis expresses that an association or industry can increase different
advantages through the enactment or laws it catches the administrative body identified with it,
inside general society intrigue hypothesis government recognized that a few associations are
having issues that can be destructive for the general public. Keeping in mind the end goal to
shield social enthusiasm from those harms or damages, the Government set administrative bodies
so as to control the conduct of organizations or associations. As per the perspective of Hui,
(2018) The Capture hypothesis underpins that enactment are forced with a target of giving
advantages to people in general or shoppers. Be that as it may, in the long run the controllers are
observed or controlled by the directed gatherings, for example, the associations or organizations.
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The ventures or organizations are not supporting the controls or getting checked by any
administrative bodies. So as to win increasingly benefit they center around catching the direction
or control the controller body itself.
The regulatory capture theory is based upon various assumptions as mentioned below -
 The regulated party, agency or customers are all seeking for profit and wants to maximize
or enhance their own profit
 Each and every party related to interest have a rational expectation with regards to
another party.
It may take huge efforts or a long period for the organizations or businesses to capture the
regulator. In order to get through the capture theory the effect of cost of capture with respect to
efficiency needs to be ignored.
As per the views of Jones, 2017, the capture theory states that the regulations can be
modified as per the needs and demands of the individual citizens who are affected by them. It
suggests the time period of the operations that serve as the interest of the industries that are been
taken in consideration. This lay a daunting impact on the establishment and handling of
regulatory environment in an industry or a nation. Besides this, Beatty, Samuelson, and Abril,
2018 states that, when the regulations are been practiced on the wider scale and regulatory
capture occurs, the interests and benefits of the industrial firms and the politicians are been
prioritize over the interest and well being of people, that will lay a major impact on the equality
of the society. Vanhala, 2018, states that, the governmental agencies or bodies that are been
facing the regulatory capture, are refereed as “captured agencies”. In accordance with the views
of Christensen, Onul and Singh, 2018, the laws and regulations that are been emphasized for the
regulatory capture, are been modified and manipulated to meet the interest and benefit of people
that will be maximum affected by the regulatory capture approach.
As per the views of Scott, 2018 the main reason of developing this theory is that the
designing of the theories or rules and regulations is been handled by the people, who can be
mostly affected by it. Thus, this impact the direct formulation of the regulations and therefore, it
has a representation of the politicians as well as the interested groups when the regulations are
been drawn. This can impact the wellness and legal consideration of the common people in a
nation. In accordance with the ideas of Neubauer and Fradella, 2018, when the regulatory
capture is occurred, the standards that are been set in to protect the interest of people are been
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thoroughly ignored and are boycotted, in order to meet the industrial and political interests. As
per the views of Guerrina and Masselot, 2018, the excess of the regulation will reduce the
profitability of the organization, thus, they are made lenient in order to handle the requirements
of financial institutions and meet the favor of their customers or citizens.
Other than this, as per the research of Gamache And et.al., 2015, the regulatory capture is
required to keep a check on the operations and the functionalities that are been followed by the
financial and political authorities and are been affected by it.
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REFERENCES
Books and Journal:
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment.
Cengage Learning.
Christensen, J., Onul, D. and Singh, P., 2018. Impact of Ethnic Civil Conflict on Migration of
Skilled Labor. Eastern Economic Journal, 44(1), pp.18-29.
Gamache, D.L. And et.al., 2015. Motivated to acquire? The impact of CEO regulatory focus on
firm acquisitions. Academy of Management Journal. 58(4). pp.1261-1282.
Guerrina, R. and Masselot, A., 2018. Walking into the footprint of EU Law: unpacking the
gendered consequences of Brexit. Social Policy and Society, pp.1-12.
Jones, L., 2017. Introduction to business law. Oxford University Press.
Levi-Faur, D., 2017. Regulatory capitalism. Regulatory Theory, p.289.
Neubauer, D.W. and Fradella, H.F., 2018. America's courts and the criminal justice system.
Cengage Learning.
Scott, J., 2018. Negotiating Constraints On Legal Translation Performance In An Outsourced
Environment. Law, Language and Communication: Negotiating Cultural, Jurisdictional
and Disciplinary Boundaries. Cambridge: Cambridge Scholars, 1.
Trad, A. and Kalpić, D., 2018. The Business Transformation Framework and its Business
Engineering Law support for (e) transactions. In Encyclopedia of Information Science
and Technology, Fourth Edition (pp. 636-650). IGI Global.
Vanhala, L., 2018. Shaping the structure of legal opportunities: Environmental NGOs bringing I
nternational environmental procedural rights back home. Law & Policy.
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