Epistemic contestation and interagency conflict: The challenge of regulating investment funds

Scholarship on regulating global finance emphasizes the importance of national and bureaucratic interests, but less attention has been devoted to epistemic sources of regulatory conflict. We address this by analyzing the failure of regulators to agree tougher rules for large investment funds after the 2008 crisis. The article suggests this outcome was the result of epistemic contestation between prudential regulators and securities regulators, rooted in divergent interpretive “frames.” We show that US and EU prudential regulators pushed for entity-based regulation of investment funds by escalating the issue to global standard-setting bodies. But this was successfully resisted by securities regulators that exercised epistemic authority through recursive practices—appeals to expertise, jurisdictional claims, and alliance building—to defend their transaction-based approach. The article demonstrates how an interpretivist perspective can provide new insights into inter-agency conflict and regulatory disputes in other policy fields.