| Abstract [eng] |
Growth of FinTechs (technology enabled financial innovations that resulted in new business models, applications, processes and products, which have a significant impact on financial institutions, market and financial service providers) resulted in examples of success and failures across Europe. In order to respond to various challenges, regulators tried to ensure stability of the financial system and at the same time promote development of FinTech companies and market innovations. One of the solutions was a regulatory sandbox - closed environment in which financial market participants could test their products and services with regulatory guidance. This thesis aimed to explain why some EU member-states adopted regulatory sandboxes, while others chose not to do so. In order to analyse reasons for creation of sandboxes in the EU, following conditions were identified: H1. Institutions, which have great capacities and strong mandate to engage with FinTech innovations would be in a better position to create sandboxes. Meanwhile institutions, whose authority is split between regulation and supervision or other priorities, would have more divided resources, less capacities and face greater time costs due to coordination process. Stronger institutions would be better prepared to implement testing environment initiatives than institutions, who have less capabilities. H2. Higher financial risks would lead to cautions behavior and preferences to financial stability, meaning that creation of exemptions even in closed settings would be less favoured. While lower risks of the financial sector could indicate greater trust and support towards new participants in the market. Possibility of lower risk would encourage creation of sandboxes, while higher chance of financial risks would restrict development of testing environments with regulatory exceptions. H3. Competitive markets are considered to have greater demand for innovations so accelerators as sandboxes would be supported as a way for new solutions to have easier transition from development into market. Meanwhile, concentrated markets would be more protective from possible FinTech competition and to have less pressure to innovate thus limiting implementation of sandboxes. H4. Sufficient capital investments could promote FinTech innovations without sandboxes, while insufficient economic funds indicate that new innovations have limited access to capital. In countries which lack capital market investments sandboxes would be promoted, while there wouldn’t be a demand for a sandbox if investments are sufficient. By using qualitative comparative analysis (QCA) to determine data of institutions (A), risk level (B), market concentration (C) and capital market depth (D), results indicated importance of institutions and market conditions. Further analysis of inconsistent cases revealed that EU countries may choose to pursue alternative regulatory strategies or consider sandboxes as fashionable or ineffective solutions. In conclusion, balancing between innovations and regulation sandboxes may prove to be one of the solutions, which address risk of uncertainty and promotes development of FinTech innovations. Combination of conditions as institutional capabilities, perception of market concentration and risks, as well as investment availability for development of new FinTech products and adopted regulatory positions can be determining factors for adoption of supervised limited testing environments. |
