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The Need for an Innovation Principle in Regulatory Impact Assessment: The Case of Finance and Innovation in Europe
Author(s) -
Zilgalvis Pēteris
Publication year - 2014
Publication title -
policy and internet
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.281
H-Index - 26
ISSN - 1944-2866
DOI - 10.1002/1944-2866.poi374
Subject(s) - dynamism , financial innovation , risk appetite , scale (ratio) , economics , financial regulation , business , financial services , finance , industrial organization , risk management , physics , quantum mechanics
Many of Europe ' s economies are hampered by a waning number of innovations, which in part is attributable to the European financial system ' s aversion to funding innovative enterprises and initiatives. Specifically, Europe ' s innovation finance ecosystem lacks scale, plurality, and risk appetite. These problems could be addressed by new and creative approaches and technologies for financing dynamism in the economy, such as crowdfunding and general financial technology or “FinTech” innovation. However, these novel approaches may be held back by regulation that focuses on stability, avoiding forum shopping, and preventing fraud, to the exclusion of other interests, particularly ignoring innovation and renewal. This article argues that this could be addressed by adopting an “innovation principle” in regulatory impact assessment: prioritizing regulatory approaches that serve to promote innovation while also addressing other regulatory aims. Two case studies are presented to illustrate this approach .