Laurence's main argument in this wellcrafted first book is that the “recent history of financial reform in Britain and Japan suggests that internationalization and economic interdependence will result in regulatory reforms that will systematically favor the actors holding the most-mobile economic assets” (p. 191). If this thesis is correct, then this finding challenges, at least for recent Japanese experience, George “Stigler's argument that producer groups will be the beneficiaries of regulatory politics” (p. 196).

Laurence holds that the growing internationalization of finance after about 1975, as characterized by greater openness to foreign lenders and borrowers, increased the political influence of both large corporate borrowers and large institutional investors in four ways: 1) Internationalization allowed some large private players to escape domestic regulations and operate under new rules abroad. 2) Internationalization allowed foreign players the possibility of entry into Britain and Japan, increasing their potential influence on the regulatory process. 3) Regulators acted to reassert their authority when they recognized that internationalization had allowed firms to more easily evade or escape their oversight. 4) As they internationalized and invested abroad, the regulatory preferences of large Japanese and British actors evolved. They began to lobby their national regulators to adopt new priorities and policies.

The British and Japanese case studies trace the progress of financial liberalization and increased competition promoted by the governments in both countries as measured by market access, price controls, product diversity, and cross-product competition. In both Britain and Japan, the move to liberalization was accompanied by the introduction of stronger standards for supervisory oversight to protect investors and their property rights. Regulators realized, sometimes with a lag, that market liberalization also required increased vigilance. Both countries introduced greater transparency and disclosure requirements and tightened the policing of professional standards related to fraud prevention and conflicts of interest.

Although his conclusions are draped in cautious language and might have benefited from greater elaboration in the succinct final chapter, Laurence holds firm views about key scholarly debates centered on Japanese financial policy. On Japanese financial politics he is sympathetic with, though more strongly convinced than, Frances McCall Rosenbluth that progress toward British and Japanese financial convergence is proceeding steadily. He strongly dissents from Steven Vogel's argument that the Japanese financial arena remains distinct and uniquely Japanese. At the same time, he associates himself with Ulrike Schaede's position that Japanese bureaucratic change is real, but that the power of the bureaucrats is eroding more slowly than financial journalists contend. Laurence suggests that domestic politics was a necessary but not a sufficient condition for launching the major financial reforms undertaken in Japan. He doubts that many key Japanese financial reforms were accelerated by U.S. threat or coercion or that Japanese leaders and bureaucrats were suddenly converted by the wisdom of the American approach. Instead, Laurence suggests that in both countries, the success of the U.S. model coupled with the onward creep of internationalization persuaded first Britain and then Japan to liberalize. Finally, Laurence concludes that the Stigler-Peltzman model of regulatory capture worked much better before 1980 than after.

Throughout this thin volume, the stories are crisp and detailed and the tone is measured and sure-handed. The only moment that Laurence seems tempted to let loose is when he relishes recounting the spectacle of financial scandals that rocked Britain and Japan from the late 1980s to the mid-1990s. The British scandals (Guinness, Barlow Clowes, Blue Arrow, Maxwell, BCCI, and Barings, pp. 91–95) forced British regulators to redouble their efforts to protect consumers after the Big Bang of 1986. A seemingly endless series of Japanese scandals (Recruit Cosmos, the losscompensation scandals, Nomura and Inagawakai, Tobashi, the price-keeping operation, the Jusen bailout, the Moody's incident, the Daiwa-U.S. case, and the Sumitomo Corporation London case, pp. 148–54 and 169–73) that preceded Japan's broad-ranging “Biggu Ban” in November 1996 so undermined the credibility of the once unassailable Ministry of Finance (MOF) and raised such tension between it and the Liberal Democratic Party (LDP) that MOF could no longer delay and deflect major liberalization.

Laurence chips away at the idea that Japan remains a unique state with an all-powerful bureaucracy. The author is well aware that there are important differences between the paths of British and Japanese financial liberalization. The reforms were far broader in Japan than in Britain because there was further to go and more to be done. The Japanese reforms were introduced more gradually from 1996 to 2001 than in Britain, but London brokers and the London Stock Exchange were warned that overnight change was coming three years before it took effect. More significantly, the British public and financial community welcomed the Big Bang, while the Japanese public and financial institutions accepted reform reluctantly and only because they saw no viable alternative. Despite these differences, Laurence makes a convincing case that Britain, Japan, and the United States are moving toward convergence and not taking different roads. Japan “has been subject to the global pressures for institutional convergence. Japan is different, but it is not unique” (p. 200). Even the Ministry of Finance has been forced to surrender some of its power in an internationalized financial environment populated by giant, international, nonstate actors.