Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification

Eric Brown & Dóra Piroska (2021) Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification, New Political Economy, DOI: 10.1080/13563467.2021.1910645

15 Pages Posted: 12 May 2021 Last revised: 6 Apr 2022

See all articles by Eric Brown

Eric Brown

International Business School - Budapest (IBS)

Dora Piroska

Central European University (CEU)

Date Written: April 8, 2021

Abstract

This article evaluates the sandbox approach as a regulatory answer to the challenges financial technology brings to finance and social relations. Taking fintech as a sociotechnological phenomenon embedded in discourses of solutionism and innovation, we show that the regulatory sandbox accepts these discourses. Instead of containing fintech, the sandbox is designed in a way that advances riskwashing of fintech even if it is disguised as risktaming. Next, we demonstrate fintech’s problematic nature that regulation should control. First, we propose that through its information processing capacity, fintech accelerates the transition from bank-based to market-based finance. Second, we demonstrate that fintech as part of a fintech-financialization apparatus has catallactic and value-extracting governance effects. Third, inserting the fintech-financialization apparatus into Fourcade and Healy’s argument on the social stratification effect of the data-driven economy, we argue that it also has a socially disruptive potential. We critique the regulatory sandbox for being a facilitator to this process and recommend increasing the number and power of veto players and veto points in complex regulatory regimes.

Keywords: Fintech, financialization, regulation, governance, banking, regulatory sandbox

JEL Classification: F39, G23, G28, O31, O32, O35, O38

Suggested Citation

Brown, Eric and Piroska, Dora, Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification (April 8, 2021). Eric Brown & Dóra Piroska (2021) Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification, New Political Economy, DOI: 10.1080/13563467.2021.1910645, Available at SSRN: https://ssrn.com/abstract=3842206

Eric Brown (Contact Author)

International Business School - Budapest (IBS) ( email )

Zrinyi u. 14
1051. Budapest, 1020
Hungary

Dora Piroska

Central European University (CEU)

Quellenstrasse 51
Vienna, 1151
Austria

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