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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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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Yayun Shen & Michael Faure, 2021. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(2), pages 183-199, June.
    7. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    8. 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.
    9. 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.
    10. 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).
    11. 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.
    12. Joshua Tasoff, 2014. "Placation and provocation," Rationality and Society, , vol. 26(1), pages 73-104, February.
    13. Yayun Shen & Michael Faure, 0. "Green building in China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-17.
    14. Chang Ma, 2020. "Self-regulation versus government regulation: an externality view," Journal of Regulatory Economics, Springer, vol. 58(2), pages 166-183, December.

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