Making regulatory agencies independent is not always a recipe for better decision-making

The principle of making certain bodies independent from government, such as regulatory agencies or central banks, has become popular in a number of contexts over recent decades. As Jacint Jordana and Guillermo Rosas write, the basic assumption underpinning the principle is that electoral pressures can have a negative effect on decision-making in certain policy areas. However, using evidence from a study of banking regulatory agencies across 81 countries, they illustrate that the benefits of independence depend largely on the political context within a given state. This suggests that while independence can be beneficial in some cases, greater attention should be paid to the individual circumstances within particular countries.