Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 3, 2022 erstellt
Description:
Financial institutions’ compliance-driven investments in technology—or “RegTech”—have grown rapidly in recent years. To understand the effects of such investments, we study regulations requiring certain financial institutions to attest to internal controls over regulatory capital and customer asset segregation. We begin by showing affected firms respond by making significant investments in enterprise resource planning, data management, and hardware. We then show that these investments allow for complementary expenditures on customer relationship management and business intelligence tools that rely upon internal information processes. As a result, affected firms experience a decline in customer complaints, particularly those most easily detected by technological monitoring. Finally, we find evidence that RegTech investments increase the market power of large financial institutions. Our results offer the first empirical evidence on RegTech investments and illustrate how these investments can have far-reaching effects on non-compliance functions and competition