Regulatory Sandboxes and Fintech Funding: Evidence from the UK

BIS Working Paper, No 901

47 Pages Posted: 15 Dec 2020 Last revised: 21 Jun 2022

See all articles by Giulio Cornelli

Giulio Cornelli

Bank for International Settlements (BIS)

Sebastian Doerr

Bank for International Settlements

Leonardo Gambacorta

Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR)

Ouarda Merrouche

University of Lausanne

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2022

Abstract

Over 50 countries have introduced regulatory sandboxes to foster financial innovation. This paper conducts the first evaluation of their ability to improve fintechs' access to capital. Exploiting the staggered introduction of the UK sandbox, we establish that firms entering the sandbox see an increase of 15% in capital raised post-entry. Their probability of raising capital increases by 50%. Investigating the mechanism, we present evidence consistent with the sandbox reducing asymmetric information and regulatory costs. Sandbox entry also has a significant positive impact on survival rates and patenting.

Keywords: fintech, start-ups, venture capital, innovation

JEL Classification: G24, G38, M13, O38

Suggested Citation

Cornelli, Giulio and Doerr, Sebastian and Gambacorta, Leonardo and Merrouche, Ouarda, Regulatory Sandboxes and Fintech Funding: Evidence from the UK (June 1, 2022). BIS Working Paper, No 901, Available at SSRN: https://ssrn.com/abstract=3727816 or http://dx.doi.org/10.2139/ssrn.3727816

Giulio Cornelli

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Sebastian Doerr (Contact Author)

Bank for International Settlements ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

HOME PAGE: http://www.sdoerr.com

Leonardo Gambacorta

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ouarda Merrouche

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

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