NASP International and Interdisciplinary Seminars

David Levi-Faur (The Hebrew University of Jerusalem)
Regulation, Trust, Intermediation

Chair: Alessia Damonte

24th June 2022, h. 14.30
Room B - NASP Graduate School
Via Pace 10 Milan 
and on Zoom

Abstract
It is widely argued that state command-and-control regulation is a burdensome, inefficient, and ineffective mechanism for regulating market actors. In recent decades, many efforts have been made to find alternatives in the form of self-regulation, with the goal of developing self-regulation regimes that ensure the public interest in a less costly, legalistic, and punitive manner. However, it is still unclear how these regimes affect citizens' trust in market actors. Using two experimental surveys with representative samples of the Israeli population (n=1195), we examine the extent to which nine different regulatory regimes influence citizens' willingness to trust a hypothetical Fintech company that requires some degree of risk-taking. The results show that public trust in market entities increases with the existence of a state regulator and decreases under self-regulatory regimes. Hybrid regimes in which a state regulator relies on pledges instead of strict oversight can increase trust, provided that the regulator is perceived as trustworthy. This paper suggests that contrary to popular belief, governmental regulation can be beneficial to both the public and firms. From this perspective, more regulation can mean more trust in the market under certain conditions.

This seminar is part of the NASP International and Interdisciplinary Seminars Series 2022.