Technology and the ‘New Governance’ Techniques of Financial Regulation

37 Pages Posted: 11 Mar 2022 Last revised: 21 Mar 2022

See all articles by David McNulty

David McNulty

Loughborough University - School of Business and Economics

Andrea Miglionico

University of Reading

Alistair Milne

Loughborough University - School of Business and Economics

Date Written: March 10, 2022

Abstract

Modern data and information technologies are having a profound impact on financial services and opening new frontiers in regulation. This article explores the deployment of technology to embed regulatory objectives within the management and decision-making processes of financial firms. Technological innovations can enhance oversight of prudential and conducts risks, and substantially lower compliance costs. They can also address the information imbalances that limit the effectiveness of older approaches, in which the firm is a ‘black box’ that can only be externally supervised. The central challenge is establishing an appropriate governance of technology in regulated firms to ensure that these serve regulatory as well as business outcomes. Such an approach should be embedded as a development of the ‘new governance’ techniques of financial regulation. This perspective is developed by reviewing current debate on the use of technology and its application to a range of challenges in financial regulation and supervision.

Keywords: regtech, meta-regulation, rule-based regulation, principles-based regulation, regulatory outcomes

JEL Classification: G18, G28, G38, K23, M15, O16, O33, O38

Suggested Citation

McNulty, David and Miglionico, Andrea and Milne, Alistair K. L., Technology and the ‘New Governance’ Techniques of Financial Regulation (March 10, 2022). European Banking Institute Working Paper Series 2022 - no. 118, Available at SSRN: https://ssrn.com/abstract=4054300 or http://dx.doi.org/10.2139/ssrn.4054300

David McNulty

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Andrea Miglionico

University of Reading ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

Alistair K. L. Milne (Contact Author)

Loughborough University - School of Business and Economics ( email )

Epinal Way
Loughborough
Leicestershire, LE11 3TU
United Kingdom

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