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Information moderation principle on the regulatory sandbox

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  • Xiaohui Chen

    (Yibin University)

Abstract

The regulatory sandbox, which promotes FinTech innovation, is expected to significantly improve the symmetry of regulatory information. However, it is not clear whether we should follow the principle of maximization or moderation when this occurs. Using the objective weighting CRITIC method, we calculate China's provincial FinTech innovation index from 2008 to 2019, to explore the relationship between regulatory information symmetry and the FinTech innovation level. The results show that regulatory information symmetry and FinTech innovation level have an inverted U-shaped nonlinear relationship. Following the improvement of symmetry in regulatory information, the FinTech innovation level first increases and then decreases. These findings are consistent with the predictions of the cognitive closure theory, cognitive needs theory, and optimal information theory. Therefore, we conclude that the regulatory sandbox should follow the principle of information moderation.

Suggested Citation

  • Xiaohui Chen, 2023. "Information moderation principle on the regulatory sandbox," Economic Change and Restructuring, Springer, vol. 56(1), pages 111-128, February.
    • Handle: RePEc:kap:ecopln:v:56:y:2023:i:1:d:10.1007_s10644-022-09415-2
    DOI: 10.1007/s10644-022-09415-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Regulatory sandbox; Regulatory information symmetry; FinTech; Moderation principle;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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