Abstract
As the fintech industry grows around the world, regulatory issues continue to be a hot topic within the industry. To overcome regulatory barriers of the fintech industry, regulatory sandboxes have been adopted. The regulatory sandboxes are beneficial to create a fintech ecosystem, but their effectiveness has not been empirically supported. This study aims to find the expected effects of regulatory sandboxes on fintech venture investments empirically. We conducted an analysis using a country-level comparative research method. To analyze it, we selected nine forerunning countries which have initially adopted regulatory sandboxes. For the purpose of validations, a comparative analysis and a regression analysis were conducted. In the results, we found that the adoption of regulatory sandboxes had very positive influences on the growth of the fintech venture investment. The results implied that regulatory sandboxes may play a vital role in increasing the influx of venture capital into the fintech venture ecosystem by removing regulatory uncertainty. The findings of this research contribute to providing the empirical evidences to policy makers in interpretations of the positive impact of regulatory sandboxes.
Highlights
As the fintech industry grows around the world, many countries are setting up various support systems to enhance the competitiveness of fintech technology and foster the industry
The empirical analysis showed that the introduction of regulatory sandboxes had positive effects on venture investment in fintech industry
The nine countries which introduced the regulatory sandboxes showed a remarkable increase in the size of venture investment
Summary
As the fintech industry grows around the world, many countries are setting up various support systems to enhance the competitiveness of fintech technology and foster the industry. Several countries in particular introduced the fintech regulatory sandboxes, one of the support systems. The regulatory sandbox is a safe, testing space where participants can test their new business model, innovative products, services, and delivery mechanisms, without immediately incurring all the normal regulatory consequences of engaging in the activity in question [1]. The reasons for introducing such regulatory sandboxes are as follows. It is not easy to know the effects of new technologies such as fintech, and whether it would have a positive effect on society or not [2,3]
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More From: Journal of Open Innovation: Technology, Market, and Complexity
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