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BIS Report: Inside the Regulatory Sandbox: Effects on Fintech Funding

BIS | Monetary and Economic Department | Nov 20, 2020

BIS regulatory sandbox and fintech funding - BIS Report:  Inside the Regulatory Sandbox:  Effects on Fintech Funding

Policymakers around the world are adopting regulatory sandboxes as a tool for spurring innovation in the financial sector while keeping alert to emerging risks.

Using unique data for the UK, this paper provides first evidence on the effectiveness of the world’s first sandbox in improving fintechs’ access to finance. Firms entering the sandbox see a significant increase of 15% in capital raised post-entry, relative to firms that did not enter; and their probability of raising capital increases by 50%.

See:  UK Digital sandbox – coronavirus (Covid-19) pilot

Our results suggest that the sandbox facilitates access to capital through two channels: reduced asymmetric information and reduced regulatory costs or uncertainty.

Our results are similar when we exploit the staggered introduction of the sandbox and compare firms in earlier to those in later sandbox cohorts, and when we compare participating firms to a matched set of comparable firms that never enters the sandbox.

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NCFA Jan 2018 resize - BIS Report:  Inside the Regulatory Sandbox:  Effects on Fintech Funding The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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