FinTech regulation: Evolutionary game model, numerical simulation, and recommendations

Abstract

In recent years, financial technology (FinTech) regulations have been split between promotion and regulation. Under the evolving relationship between regulators and financial institutions, achieving a win-win situation between financial institutions’ FinTech innovation and effective regulation is a significant issue, both in practice and theory, that needs an immediate solution. This study extensively demonstrates the behavioral strategies and game outcomes of regulators and financial institutions by constructing four evolutionary game models. In addition, it aims to disclose the game relationship between regulators and financial institutions. Furthermore, this study reveals the experimental results following the numerical simulation of game activities between regulators and financial institutions using MTALAB R2018b, based on data from a commercial bank in China. Finally, this study provides effective recommendations for both regulators and financial institutions.