RegTech: Technology-driven compliance and its effects on profitability, operations, and market structure

• 成果类型: Article
• 署名作者: Charoenwong, Ben; Kowaleski, Zachary T.; Kwan, Alan; Sutherland, Andrew G.
• 署名单位: National University of Singapore; University of Texas System; University of Texas Austin; University of Hong Kong; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103792
• 发表日期: 2024
• 关键词: RegTech; FinTech; technology adoption; Financial regulation; Compliance burden; Internal controls; Complementary investments

摘要

Compliance-driven investments in technology-or RegTech-are growing rapidly. To understand the effects on the financial sector, we study firms' responses to new internal control requirements. Affected firms make significant investments in ERP and hardware. These expenditures then enable complementary investments that are leveraged for noncompliance purposes, leading to modest savings from avoided customer complaints and misconduct. IT budgets rise and profits fall, especially at small firms, and acquisition activity and market concentration increase. Our results illustrate how regulation can directly and indirectly affect technology adoption, which in turn affects noncompliance functions and market structure.