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FinTech Development and Regulatory Scrutiny: A Contradiction? The Case of Latvia

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  • Ramona Rupeika-Apoga

    (Faculty of Business, Management and Economics, University of Latvia, LV-1586 Riga, Latvia)

  • Stefan Wendt

    (Department of Business, Bifröst University, 311 Borgarnes, Iceland)

Abstract

The purpose of this study is to examine whether FinTech companies believe that the growing dependence on regulation represents a potential risk for their development. In 2021, we conducted a survey among Latvian FinTech companies to ascertain their attitude toward regulatory scrutiny. We received 31 responses, representing a 33% response rate. The responses show that regulation is still one of the most pressing issues for FinTech companies, even though it is not necessarily regulation per se that causes concerns, but the lack of a regulatory framework that would be suitable for the special situation of the FinTech sector. However, regulation is now regarded as less problematic than it was in a previous survey in 2019, when respondents saw regulation as the most pressing issue. Moreover, the FinTech industry anticipates better support from the regulator, such as more realistic sandbox approaches and a willingness to consider new business models. According to the survey responses, the UK, Estonian, and Lithuanian regulators can serve as inspiration in this regard. Latvian FinTech companies expect regulators to be more flexible and open in their communication. This study is intended to advance regulatory reform by aiding the understanding of the requirements of fast-evolving FinTech companies.

Suggested Citation

  • Ramona Rupeika-Apoga & Stefan Wendt, 2022. "FinTech Development and Regulatory Scrutiny: A Contradiction? The Case of Latvia," Risks, MDPI, vol. 10(9), pages 1-13, August.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:9:p:167-:d:895179
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    References listed on IDEAS

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    1. Ramona Rupeika-Apoga & Eleftherios I. Thalassinos, 2020. "Ideas for a Regulatory Definition of FinTech," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 136-154.
    2. Erik Feyen & Jon Frost & Leonardo Gambacorta & Harish Natarajan & Matthew Saal, 2021. "Fintech and the digital transformation of financial services: implications for market structure and public policy," BIS Papers, Bank for International Settlements, number 117.
    3. Yue Ma & De Liu, 2017. "Introduction to the special issue on Crowdfunding and FinTech," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-4, December.
    4. Syeda Hina Zaidi & Ramona Rupeika-Apoga, 2021. "Liquidity Synchronization, Its Determinants and Outcomes under Economic Growth Volatility: Evidence from Emerging Asian Economies," Risks, MDPI, vol. 9(2), pages 1-20, February.
    5. Andreas Oehler & Matthias Horn & Stefan Wendt, 2022. "Investor Characteristics and their Impact on the Decision to use a Robo-advisor," Journal of Financial Services Research, Springer;Western Finance Association, vol. 62(1), pages 91-125, October.
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