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Regulatory Fragmentation

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  • JOSEPH KALMENOVITZ
  • MICHELLE LOWRY
  • EKATERINA VOLKOVA

Abstract

Regulatory fragmentation occurs when multiple federal agencies oversee a single issue. Using the full text of the Federal Register, the government's official daily publication, we provide the first systematic evidence on the extent and costs of regulatory fragmentation. Fragmentation increases the firm's costs while lowering its productivity, profitability, and growth. Moreover, it deters entry into an industry and increases the propensity of small firms to exit. These effects arise from redundancy and, more prominently, from inconsistencies between government agencies. Our results uncover a new source of regulatory burden, and we show that agency costs among regulators contribute to this burden.

Suggested Citation

  • Joseph Kalmenovitz & Michelle Lowry & Ekaterina Volkova, 2025. "Regulatory Fragmentation," Journal of Finance, American Finance Association, vol. 80(2), pages 1081-1126, April.
    • Handle: RePEc:bla:jfinan:v:80:y:2025:i:2:p:1081-1126
    DOI: 10.1111/jofi.13423
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