Prof Romano presented the results of her empirical study, which observed that major financial crises in the US are followed by new legislation aimed at regulating the financial sector, particularly banks. Emerging demands by media to act quickly and political reactions to the crises are among the main reasons for this reaction by the legislator. After the end of the triggering crisis, the new legislation remains in force for a long time.

Of course, regulatory legislation is not enacted only in response to a crisis. However, the ‘iron law’ postulated by Prof Romano assumes a systematic difference between these two types of legislation. To test this assumption, therefore, the study examined the differences between major legislation enacted in response to a crisis and legislation enacted outside such a context.

Among the most notable differences found was an increasing density of ‘restrictive words’, that is, strict prohibitions or requirements addressed to banks. These findings were established by a text-based analysis of the respective statutes. The central explanation for these differences lies in the ‘salience’ of the respective subject of regulation for the legislator. After a crisis, so to speak, the topics dealt with receive greater attention from the media and the public, whereupon the legislator likely feels compelled to enact more restrictive, but also more complex corresponding laws.

We would like to thank Prof Romano very much for an interesting and informative evening!

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