Fintech Lending: A Study of Expectations Versus Market Outcomes

This article explores expectations and outcomes. It documents the expectations for the fintech lending industry, which has emerged in this decade, and compares such expectations to market outcomes. It presents an evidence-based analysis for policy making decisions. Part one of the article documents expectations—possible benefits and risks of fintech lending—through large-scale surveys and interviews of industry, consumer and government stakeholders. Part two of the article examines market outcomes—benefits and risks that have been realized or failed to materialize as documented by studies of substantial data sets of various types of fintech loans. The benefits and risks explored include increased access to credit, lower costs, lack of transparency and delinquency and default. After comparing expectations and outcomes, the article considers policy implications, particularly the implications for chartering special purpose national banks

Corporate Wrongdoing: Interactions of Legal Mandates and Corporate Culture

In recent years, enforcement officials have imposed billions of dollars in sanctions on all major U.S. financial institutions and many major financial institutions abroad. Similar sanctions have been imposed on nonfinancial institutions. The sanctions are the result of findings of recurrent violations of law, as well as recidivism. Why have existing regulatory standards and enforcement policies led to repeated violations of law? Will the recent billion dollar sanctions deter future wrongdoing? This article explores these issues by examining the philosophy motivating regulatory policy and action in the United States and United Kingdom, using financial regulators as a case study. This article discusses the interaction between two institutions that influence corporate actors: government and corporate culture. That interaction is examined through the lens of behavioral decision theory and complexity theory. This article draws the conclusion that regulators in the United States continue to be blind to cognitive influences on corporate behavior. Enforcement policy in the United States has ignored the multiple influences on corporate behavior that interact and lead to nonlinear outcomes. The only change made in U.S. enforcement strategy, if any, has been a greater emphasis on large penalties to deter future misconduct. This emphasis continues to reflect a linear, reductionist view of corporate behavior. By contrast, regulators in the United Kingdom have begun to recognize cognitive influences, and are rethinking their enforcement strategy based, in part, on recognition of multiple influences on corporate decision-making. U.S. enforcement policy’s regulatory blindness appears likely to lead to recurring issues of noncompliance

Corporate Wrongdoing: Interactions of Legal Mandates and Corporate Culture

In recent years, enforcement officials have imposed billions of dollars in sanctions on all major U.S. financial institutions and many major financial institutions abroad. Similar sanctions have been imposed on nonfinancial institutions. The sanctions are the result of findings of recurrent violations of law, as well as recidivism. Why have existing regulatory standards and enforcement policies led to repeated violations of law? Will the recent billion dollar sanctions deter future wrongdoing? This article explores these issues by examining the philosophy motivating regulatory policy and action in the United States and United Kingdom, using financial regulators as a case study. This article discusses the interaction between two institutions that influence corporate actors: government and corporate culture. That interaction is examined through the lens of behavioral decision theory and complexity theory. This article draws the conclusion that regulators in the United States continue to be blind to cognitive influences on corporate behavior. Enforcement policy in the United States has ignored the multiple influences on corporate behavior that interact and lead to nonlinear outcomes. The only change made in U.S. enforcement strategy, if any, has been a greater emphasis on large penalties to deter future misconduct. This emphasis continues to reflect a linear, reductionist view of corporate behavior. By contrast, regulators in the United Kingdom have begun to recognize cognitive influences, and are rethinking their enforcement strategy based, in part, on recognition of multiple influences on corporate decision-making. U.S. enforcement policy’s regulatory blindness appears likely to lead to recurring issues of noncompliance

Fintech Lending: A Study of Expectations Versus Market Outcomes

This article explores expectations and outcomes. It documents the expectations for the fintech lending industry, which has emerged in this decade, and compares such expectations to market outcomes. It presents an evidence-based analysis for policy making decisions. Part one of the article documents expectations—possible benefits and risks of fintech lending—through large-scale surveys and interviews of industry, consumer and government stakeholders. Part two of the article examines market outcomes—benefits and risks that have been realized or failed to materialize as documented by studies of substantial data sets of various types of fintech loans. The benefits and risks explored include increased access to credit, lower costs, lack of transparency and delinquency and default. After comparing expectations and outcomes, the article considers policy implications, particularly the implications for chartering special purpose national banks

Barriers to Market Discipline: A Comparative Study of Regulatory Reforms [Article]

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