The commercial banking industry in the United States has dramatically restructured. While concentration has increased, banks no longer dominate financial services. Instead, they have become part of holding companies that own a broad range of closely related financial services companies that are both complementary and competitive. Historical prohibitions against interstate banking have been liberalized as have the regulatory barriers that strictly separate banking, insurance, and securities market activities. As risk and complexity in the financial system increases and traditional sources of returns in banking diminish, pressure for further change will mount.
While the facts of regulatory change in U.S. commercial banking are not entirely new, we have a limited understanding of how it actually happened. And how it happened holds important lessons for future change as well as for other banking systems that are facing similar pressures. The Invisible Hands of U.S. Commercial Banking Reform shows how to analyze incentives for economic and institutional change and then demonstrates how incentives shape beliefs and choices. Contrary to commonly held assumptions, U.S. commercial banking is governed by a closely integrated combination of markets and governments and large-scale adaptation appears to require both relatively unfettered private action and government guarantees.

The work of Elinor and Vincent Ostrom represents a distinctive contribution to the study of political economy, public policy and administration, collective action, and governance theory. Efforts to present a comprehensive overview of the Bloomington School that grew around the Workshop in Political Theory and Policy Analysis (now renamed the Ostrom Workshop), which they founded more than 40 years ago, received new impetus with the award of the Nobel Memorial Prize in Economic Science to Elinor Ostrom in 2009. Since then, renewed attempts have been made to map the Ostroms' contributions to theories of polycentric governance and collective action, and to multi-methods and comparative institutional analysis of ways of managing social and ecological systems, common pool resources, public economies, and metropolitan reform. The open-ended and multiform nature of the Ostroms' research program defies a single comprehensive overview; yet, it is a stimulus towards both creativity and disciplinary cross-fertilization in social science research. What sets this volume apart is that it brings together theory and practice, models and work on the ground, design and creativity, empirics and norms, to outline the significance of the Ostroms' research program for the future. Each contribution to the volume takes the Ostromian perspective as the point of departure, amplifies it and explores the ground for future work by engaging with other approaches and areas of research with which the Bloomington School has some affinities. This way of testing and extending the ideas and methods of the Ostroms is particularly appropriate since their research program, initiated and nurtured through the Workshop, has always been in-between different fields and sub-fields in the social sciences (political science, economics, public administration, law, history, anthropology), cultivating a strong interdisciplinary way of doing research and exploiting the virtuous circle between theory, analysis, model building, and empirical research. Engaging in a creative dialogue with ideas and methods of other research programs is a way of sharpening one's analytic tools, while renovating one's own vision of social research. This volume is a way of thinking through and beyond the Bloomington School.

The commercial banking industry in the United States has dramatically restructured. While concentration has increased, banks no longer dominate financial services. Instead, they have become part of holding companies that own a broad range of closely related financial services companies that are both complementary and competitive. Historical prohibitions against interstate banking have been liberalized as have the regulatory barriers that strictly separate banking, insurance, and securities market activities. As risk and complexity in the financial system increases and traditional sources of returns in banking diminish, pressure for further change will mount.
While the facts of regulatory change in U.S. commercial banking are not entirely new, we have a limited understanding of how it actually happened. And how it happened holds important lessons for future change as well as for other banking systems that are facing similar pressures. The Invisible Hands of U.S. Commercial Banking Reform shows how to analyze incentives for economic and institutional change and then demonstrates how incentives shape beliefs and choices. Contrary to commonly held assumptions, U.S. commercial banking is governed by a closely integrated combination of markets and governments and large-scale adaptation appears to require both relatively unfettered private action and government guarantees.