The Impact of the Regulatory Sandbox on the FinTech Industry

36 Pages Posted: 18 Aug 2022

See all articles by Thomas F. Hellmann

Thomas F. Hellmann

University of Oxford - Said Business School; University of Oxford - Said Business School; European Corporate Governance Initiative

Alexander Montag

University of Warwick; Research Institute of Industrial Economics (IFN)

Nir Vulkan

University of Oxford - Said Business School

Date Written: August 2022

Abstract

We investigate the impact of the UK regulatory sandbox on the UK FinTech industry. By now regulatory sandboxes operate in 57 countries and have become an important policy tool for governments to support the emergence of a FinTech sector. We use comprehensive data from the UK regulatory sandbox which was the first sandbox ever created and has the largest number of participating companies overall. We find evidence of positive externalities at the industry level. Participation in the sandbox by one start-up is followed by increased entry and more money being raised by other start-ups in the same industry. There is some evidence that the sandbox screens out better companies, but we find no evidence that companies’ momentum significantly increases after their participation in the sandbox.

Keywords: Regulatory Sandbox, FinTech, Financial Regulation, Start-Ups

JEL Classification: G28, M13, O38

Suggested Citation

Hellmann, Thomas F. and Montag, Alexander and Vulkan, Nir, The Impact of the Regulatory Sandbox on the FinTech Industry (August 2022). Available at SSRN: https://ssrn.com/abstract=4187295 or http://dx.doi.org/10.2139/ssrn.4187295

Thomas F. Hellmann

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

European Corporate Governance Initiative ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Alexander Montag

University of Warwick

Coventry, CV4 7AL
United Kingdom

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Nir Vulkan (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 01865 288929, or 288338 (Phone)
+44 01865 288805 (Fax)

HOME PAGE: https://vulkan.worc.ox.ac.uk/

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