Description
What drives governments to either promote or restrain the growth of new Financial Technologies (fintech)? The global rise of fintech firms has prompted governments to consider how best to balance managing the risks of new and untested technologies with encouraging innovation and growth. Regulatory sandboxes have emerged as a novel policy tool to address this dilemma. Yet, their adoption across the fintech sector remains relatively underexplored. In this paper, we analyze the factors influencing the global adoption of fintech regulatory sandboxes. Our findings indicate that policies fostering technological innovation, such as e-government initiatives, are strongly associated with a higher likelihood of sandbox adoption, while financial policies – such as openness – have limited explanatory power. Additionally, countries with greater public integrity and common law legal systems are more inclined to establish these institutions. These findings suggest that fintech policies may correspond more to the political economy of technological innovation rather that of finance.
