Financial Techology’s (FinTech’s) Disruptive Impact on Financial Markets: Social Costs and Benefits of an Emerging New Architecture

Samenvatting

Financial technology (FinTech) is disrupting the way agents interact in financial markets. Robots for example not only facilitate trading, they increasingly do the trading. FinTech is everywhere, media citations are through the roof. Regulators worldwide are concerned. Mark Carney of the Bank of England, in his recent G20 speech, worries about newly emerging systemic risks.
The academic community shares this strong interest. A top-tier journal, Review of Financial Studies, recently called for FinTech projects. Leading scholars such as Philippon (NYU), Schoar (MIT), Lo (MIT), and Boot (U of Amsterdam), explored FinTech and conclude that technology will reshape financial institutions and markets in ways that existing knowledge about them is of little use. Moreover, the ensuing digital economy will produce big data in need of being processed meaningfully to both understand and control the new financial system.
My VICI research helps fill the knowledge gap. Its main research themes are: How does FinTech affect securities market efficiency/fragility? And, more broadly, how does it affect financial stability?
I believe that I am uniquely positioned to do such research. As for theory, I will develop the next generation of economic (microstructure) models that embed FinTech frictions. I will leverage the knowledge acquired in my earlier theoretical papers. As for empirics, I benefit from having solved big-data challenges in my empirical papers using state-of-the-art econometric techniques and appropriate hard- and software. Finally, the data needed is mostly locked up in central banks, clearinghouses, and exchanges. Here I benefit from relationships that I developed in my VENI and VIDI years. I will collaborate with researchers inside these institutions to access the data.
The VICI papers will target top academic journals but also regulators and industry participants. I will further organize a final-year inclusive (i.e., academic and non-academic) conference to maximize visibility of all VICI results.

Kenmerken

Projectnummer

016.Vici.185.068

Hoofdaanvrager

Prof. dr. A.J. Menkveld

Verbonden aan

Vrije Universiteit Amsterdam, School of Business and Economics, Financiering en Bedrijfskunde van de Financiële Sector

Looptijd

01/09/2018 tot 31/08/2023