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Why preferences and institutions change: A systematic process analysis of credit rating in G ermany
Author(s) -
Trampusch Christine
Publication year - 2014
Publication title -
european journal of political research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.267
H-Index - 95
eISSN - 1475-6765
pISSN - 0304-4130
DOI - 10.1111/1475-6765.12034
Subject(s) - german , preference , credit rating , institutionalisation , institutionalism , capitalism , institutional analysis , economics , cites , positive economics , sociology , political science , actuarial science , social science , microeconomics , law , archaeology , politics , fishery , biology , history
Abstract This article argues that a within‐case analysis of the causes and patterns of the institutionalisation of rating in the German financial system offers fresh insights into change in the major socioeconomic institutions of advanced capitalism. Using the method of systematic process analysis, the article explores the expansion of credit rating in the German banking system from three perspectives: historical (power), sociological (diffusion) and behavioural institutionalism (prospect theory). It demonstrates that the proliferation of credit rating resulted from a change of preference on the part of large banks. With G ermany as a least likely case for successfully implementing rating, the study's main lesson is that institutional analysis may benefit from incorporating behavioural institutionalism into the analysis of preference change because this cites economic motivations as causes of preference shifts and institutional changes.