Robert M. La Follette School of Public Affairs
Friday, December 18, 2015

Copelovitch introduces innovative measure of financial regulatory transparency in new policy brief

Copelovitch introduces innovative measure of financial regulatory transparency in new policy brief

In a new policy brief written for Bruegel, a major Brussels-based tank devoted to international and European economic issues, La Follette School Professor Mark Copelovitch and his co-authors, Christopher Gandrud and Mark Hallerberg (both of the Hertie School of Governance in Berlin), introduce a new Financial Regulatory Transparency (FRT) index and discusses its implications for the future of financial regulation in the European Union. This innovative measure compares 68 countries over 22 years, based on how they report basic macro-prudential data to international financial institutions like the International Monetary Fund and World Bank. Although financial regulatory transparency has been found to enhance market stability and democratic legitimacy, there have been few academic studies of the issue and no broadly recognized measure of transparency currently exists. The FRT index is a unique measure that fills this data gap and makes a significant contribution to the existing literature on regulatory transparency.

Copelovitch, Gandrud and Hallerberg conclude that increased transparency lowers borrowing costs for highly indebted countries, although more transparency can increase these costs for countries whose debt levels are rapidly increasing. The data also reveal a striking trend for the countries of the European Union: they are notably more opaque than other high income countries such as the United States. The authors recommend that the European Central Bank and other European institutions take on a greater role in coordinating the reporting of this regulatory data in order to promote transparency. This reform would improve democratic accountability and financial system efficiency in the European Union.

The Bruegel policy brief, “Financial Regulatory Transparency: New Data and Implications for EU Policy,” was published in the December 2015 issue of Breugel Policy Contribution. It is available online at: A related blog post is available at:

Copelovitch is an expert in international political economy and international organizations, with a focus on international financial issues. The research project and ongoing collaboration with Gandrud and Hallerberg developed as a result of his sabbatical as a visiting scholar at the Hertie School during the 2013-14 academic year.