How Regulatory Costs Impede Financial Technology Gains
Year: 2026
Type: article
Abstract: ABSTRACT While financial technology innovation lowers intermediation costs, regulatory frictions may prevent these gains from reaching long‐term investors and borrowers. Using variation in retail investor participation driven by state securities registration lapses in peer‐to‐peer lending, we demonstrate that regulatory frictions are associated with intermediation costs. Such frictions to investor participation impose substantial costs on excluded investors, with quote‐based estimates suggesting an average loss in yield‐to‐maturity of 190–235 BPs. Primary‐market interest rates also rise around lapse events, though we cannot distinguish between platform pricing responses and equilibrium capital tightening. Our results illustrate how regulatory fragmentation can generate redistribution costs in marketplace lending.
Source: European Financial Management
DOI: 10.1111/eufm.70075
Authors: Shyam Venkatesan, Brian Wolfe, Woongsun Yoo
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,350
OpenAlex ID: W7160899038