Regulatory Sandboxes and Fintech Funding: Evidence from the UK*

Giulio Cornelli, Sebastian Doerr, Leonardo Gambacorta and Ouarda Merrouche

Review of Finance, 2024, vol. 28, issue 1, 203-233

Abstract: Over fifty countries have introduced regulatory sandboxes to foster financial innovation. This article conducts the first evaluation of their ability to improve fintechs’ access to capital and attendant real effects. Exploiting the staggered introduction of the UK sandbox, we establish that firms entering the sandbox see an increase of 15% in capital raised post-entry. Their probability of raising capital increases by 50%. Sandbox entry also has a significant positive effect on survival rates and patenting. Investigating the mechanism, we present evidence consistent with lower asymmetric information and regulatory costs.

Keywords: Regulatory sandbox; Fintech; Start-ups; Venture capital; Innovation (search for similar items in EconPapers)
JEL-codes: G24 G38 M13 O38 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Regulatory Sandboxes and Fintech Funding: Evidence from the UK (2024)
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