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The Formation of Institutional Demands – A Study of Regulatory Initiatives on Financial Robo-Advising
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.ORCID iD: 0000-0002-4536-0259
2022 (English)Manuscript (preprint) (Other academic)
Abstract [en]

Financial robo-advising and knowledge on how regulatory initiatives influence organisations are two areas that are not very well understood. We know that institutional demands, such as regulations, can influence organisations, as discussed by DiMaggio and Powell (1983), but there is a dearth of research on how. In particular, how regulatory initiatives related to a new emerging phenomenon, such as financial robo-advising, influence organisations. Even before specific regulations have been adopted, regulatory initiatives manifested in texts can influence organisations (see Cooren, 2004; Fairclough, 1992; Phillips et al., 2004; Vaara et al., 2010). The purpose of this paper is to study how institutional demands, manifested as regulatory initiatives, influence financial robo-advising. To do so, I conducted a qualitative study where I critically analysed potential effects, based on four regulatory texts on financial robo-advising. These texts include regulatory documents by the financial regulatory bodies in Sweden and in EU that have been produced on this topic. The study finds that a new technology such as financial robo-advising is strongly influenced by the regulatory discourse and how both financial advising and financial robo-advising are defined. I show how the new form of financial advising, including financial robo-advising, comes into being, by the interplay of text and talks between the regulator and involved stakeholders. The study also finds that financial robo-advisors can be viewed as intermediators of hard information, even though the advice may not be interpreted or viewed as such.

Place, publisher, year, edition, pages
2022. , p. 32
Keywords [en]
Financial robo-advising, Institutional demands, Regulatory initiatives, Hard and soft information
National Category
Business Administration
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:uu:diva-466049OAI: oai:DiVA.org:uu-466049DiVA, id: diva2:1631384
Available from: 2022-01-24 Created: 2022-01-24 Last updated: 2022-01-31
In thesis
1. On Institutional Demands in Banking and the Exchange of Hard and Soft Accounting Information
Open this publication in new window or tab >>On Institutional Demands in Banking and the Exchange of Hard and Soft Accounting Information
2022 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The overarching purpose of the thesis is to explore how institutional demands influence banks, which has been a core issue in banking research. This has become even more critical since the financial crisis of 2007–2009. By conducting a qualitative study and paying attention to the exchange of different forms of hard and soft accounting information, the thesis expands the current knowledge on how institutional demands influence highly regulated organisations, such as banks, which can face sanctions if they are not compliant when potential regulations enter into force.

The thesis contributes to literature on institutional demands, as the thesis shows that even financial regulatory initiatives influence banks. Accordingly, the potential regulations can create tensions between banks and regulators. Here, the increased dependency on information technology (IT), which must be developed, is central. This is demonstrated by studying regulations and the formation of regulatory initiatives, including MiFID II, KRITA and financial robo-advising.

The thesis includes four individual studies and puts them in a larger context, and it relates them to each other to increase our knowledge. Study I, which contributes to knowledge on how exchanges between firms and banks take place. It demonstrates that the exchange is more complex than previous literature suggests, and that the exchange differs depending on what financial services are considered. Studies II–IV then add knowledge on how institutional demands, manifested by regulations and regulatory initiatives, influence banks. These studies also reflect on the importance of qualitative information when adopting new financial regulations and when regulating certain bank services, primarily those services that rely on softer forms of accounting information.

Specifically, Study IV demonstrates how financial robo-advising comes into being and influences financial intermediaries, including FinTech companies, such as modern banks, by focusing on the regulatory discourse and the regulators’ definition of financial robo-advising.

Furthermore, the thesis contributes to the literature on hard and soft accounting information, in the sense that there are a number of different definitions that, to some extent, can be paradoxical. The study demonstrates how the definition that is used in our attempt to capture accounting information also influences the result. This touches on the value that we attempt to measure and the core of what is considered as accounting information.

Finally, the thesis demonstrates that regulators tend to rely more on information, such as numbers and quantitative information, instead of more context dependent information, such as qualitative information. Thus, the demanded accounting information influences and materialises, to some extent, what banks become. This means that the demand from regulators influences these regulated firms, which, in turn, adapt to the demands and develop their infrastructure accordingly. Thus, the IT-infrastructure becomes a part of our physical reality – i.e. the ideas and demands of regulators become transformed by the regulated into the physical information systems, manifested by e.g. financial robo-advisors.  

Place, publisher, year, edition, pages
Uppsala: Uppsala universitet, 2022. p. 114
Series
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN 1103-8454 ; 212
Keywords
Banking, Institutional demands, Regulatory initiatives, Exchange, Accounting information, Hard information, Soft information, Financial regulation, KRITA, MiFID II, Financial robo-advising, Transactions, Relationship, Firms, Digitalisation, Tension
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-466051 (URN)978-91-506-2925-5 (ISBN)
Public defence
2022-04-08, Hörsal 2, Ekonomikum, Kyrkogårdsgatan 10, Uppsala, 10:15 (English)
Opponent
Supervisors
Available from: 2022-02-22 Created: 2022-01-31 Last updated: 2022-02-22

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