The Impact of the Regulatory Sandbox on the FinTech Industry
36 Pages Posted: 18 Aug 2022
Date Written: August 2022
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: Suggested Citation