FinTech Regulation Subject to Human Psychology

Posted: 6 Nov 2019

See all articles by Henry Penikas

Henry Penikas

National Research University Higher School of Economics

Date Written: October 12, 2018


Ten years after the global crisis of 2007-09 the financial regulation has being enhanced with the pace of world stock markets growth. Latter ones have hit their historical maximum values being two to three fold higher than on the eve of the crisis. Such prudential tightening incentivizes using financial technologies to create new banking products and optimize regulatory burden. Same time it inflates the stock market bubble leading to greater fragility and increases the probability of another global crisis. Current research shows how human psychology has to be accounted for. This is relevant both for humans managing financial institutions as objects of regulation and humans benefiting from regulation when consuming financial services. It is shown that unconventional policy measure of abandoning both regulation and state deposit insurance enables to enhance financial stability. It implies more conservative behaviour and diminishes risk-appetite for both financiers and their clients.

Keywords: Basel Committee, prudential spiral, regulation, risk, traffic

JEL Classification: G28, E58, R41

Suggested Citation

Penikas, Henry, FinTech Regulation Subject to Human Psychology (October 12, 2018). Available at SSRN:

Henry Penikas (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017

Do you want regular updates from SSRN on Twitter?

Paper statistics

Abstract Views
PlumX Metrics