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Self-Regulation, Innovation, and the Financial Industry

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  • Stefanadis, Christodoulos

Abstract

The paper shows that the presence of continuous innovation may be one of the driving forces of self-regulation. In an infinitely repeated game, there exists a class of subgame perfect equilibria in which the self-regulatory organization, or SRO, pursues socially desirable objectives along the equilibrium path to stave off government intervention. Delegating regulatory authority to the SRO eliminates certification-related delays in the adoption of new services, fosters innovation and leads to higher social welfare. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Stefanadis, Christodoulos, 2003. "Self-Regulation, Innovation, and the Financial Industry," Journal of Regulatory Economics, Springer, vol. 23(1), pages 5-25, January.
    • Handle: RePEc:kap:regeco:v:23:y:2003:i:1:p:5-25
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    Cited by:

    1. Tamer Khraisha & Keren Arthur, 2018. "Can we have a general theory of financial innovation processes? A conceptual review," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-27, December.
    2. Andreas Freytag & Klaus Winkler, 2004. "The Economics of Self-regulation in telecommunications under sunset legislation," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 17/2004, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    3. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    4. Grajzl, Peter & Murrell, Peter, 2007. "Allocating lawmaking powers: Self-regulation vs government regulation," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 520-545, September.
    5. Joshua Tasoff, 2014. "Placation and provocation," Rationality and Society, , vol. 26(1), pages 73-104, February.
    6. Yayun Shen & Michael Faure, 0. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-17.
    7. Cave, Jonathan & Marsden, Christopher, 2008. "Quis custodiet ipsos custodies in the Internet: self-regulation as a threat and a promise," MPRA Paper 83193, University Library of Munich, Germany.
    8. Stango, Victor, 2003. "Strategic Responses to Regulatory Threat in the Credit Card Market," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 427-452, October.
    9. Javier Núñez, 2007. "Can self regulation work?: a story of corruption, impunity and cover-up," Journal of Regulatory Economics, Springer, vol. 31(2), pages 209-233, April.
    10. Chang Ma, 2020. "Self-regulation versus government regulation: an externality view," Journal of Regulatory Economics, Springer, vol. 58(2), pages 166-183, December.
    11. Keren Naa Abeka Arthur, 2017. "Financial innovation and its governance: Cases of two major innovations in the financial sector," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-12, December.
    12. José Américo Pereira Antunes, 2021. "To supervise or to self-supervise: a machine learning based comparison on credit supervision," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-21, December.
    13. Grajzl, Peter & Baniak, Andrzej, 2009. "Industry self-regulation, subversion of public institutions, and social control of torts," International Review of Law and Economics, Elsevier, vol. 29(4), pages 360-374, December.
    14. Baule, Rainer & Münchhalfen, Patrick & Shkel, David & Tallau, Christian, 2023. "Fair-washing in the market for structured retail products? Voluntary self-regulation versus government regulation," Journal of Banking & Finance, Elsevier, vol. 148(C).
    15. Yayun Shen & Michael Faure, 2021. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(2), pages 183-199, June.

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