Economic research competition

We’re awarding 4 participants up to £30,000 each to produce a report on growth, competitiveness and regulation in the UK financial services sector.

Competition timeline

25 November 2024

Competition launches

15 December 2024, 11.59pm

Deadline for proposals

By 22 December 2024

Awards made

31 March 2025

Final drafts of reports submitted

Why we're launching the competition

Growth is central to our mission. Last year, Parliament set us a new secondary objective[1] to support growth and competitiveness over the medium to long term.

The objective of this competition is to:

Widen and deepen our evidence base on growth and competitiveness.
Introduce fresh and innovative thinking to the challenge of growth.
Provide actionable insights to inform future policy and strategy development.

Research themes for the competition

On 17 October, we published a summary of the literature[2] on growth, competitiveness and regulation in financial services.

The literature review highlighted several important gaps in its evidence and knowledge, which are important to fill. These gaps can be summarised into the following 3 research themes:

Growth and productivity of the UK financial services sector

Growth is the increase in size of the economy. Growth can be driven by increases in productivity.

How well do we understand productivity in financial services? How can we accurately measure it? How do we reconcile the seemingly inverse relationship between risk exposure and productivity?
What caused the apparent changes in financial services productivity following the global financial crisis? What could be done about them?
Which barriers hinder the widespread adoption and diffusion of new technologies in the financial services sector and what regulatory changes could reduce or remove these barriers? Are there any other ways regulation could encourage technological adoption and diffusion?
What are the incentives and constraints for firms to innovate and increase productivity in UK financial services? How does financial service regulation affect this? How does the level of competition or the ability to cooperate affect these incentives and constraints?
How has regulation affected risk-taking in UK financial services, particularly with regards to lending and investment decisions?

International competitiveness of the UK financial services sector

Competitiveness is a measure of how attractive the UK is for businesses, consumers and investors and considers how well the UK economy achieves long-term sustainability, attracts international businesses and enables UK-based firms to compete effectively in international markets. It differs from competition (which is not a focus area) which refers to the process of rivalry between firms seeking to win customers’ business which, when it works effectively, leads to better prices, service and quality for consumers.

What are the threats and opportunities for the international competitiveness of the UK’s financial services sector over the next 10 years? What role is there for regulation in addressing or enhancing these?
What is the relative value and the cost of UK financial regulation to firms competing internationally, and what difference does this make to their locational decisions (for example, where to locate business operations, where to locate business headquarters, what international markets to export to)?
What do agglomeration and space theories suggest would improve growth, international attractiveness, and competitiveness of UK-based financial services?

Supporting the real economy and considering regulatory impacts

Regulation broadly refers to the tools the FCA has at its disposal to influence outcomes in financial services for businesses and consumers. It covers formal powers such rulemaking on conduct, prudential and other requirements, authorisation and supervision of firms, and the enforcement of rules, as well as wider advocacy and thought leadership.

How can regulatory or technological interventions such as Digital ID or Open Finance support growth through decreasing the cost of lending to, or investing in, SME’s and infrastructure in the UK? Do they affect growth through any other channels?
What factors affect real economy firms’ access to finance, and real economy firms’ demand for finance? Which factors are more important in the UK, and to what extent are issues around finance for productive investment driven by finance supply factors or finance demand factors? How can regulation address these issues?
What are the potential benefits of shifting investment incentives from more speculative investments to productive long-term growth-enhancing investments, and how can financial service regulation encourage this?
What risks might UK financial services activities pose for long-term UK growth (for example, financial instability, crowding out other real economy sectors)? What role can regulation play in mitigating these risks?
What role does UK financial services sector play in supporting individuals to increase their human capital? How can regulation encourage this?
What is the relationship between financial inclusion and economic growth in developed economies such as the UK? What regulatory levers could increase the dimensions of inclusion which enable growth and efficiency?
What do alternative approaches such as complexity theory and systems thinking imply about the role of financial services and regulation in supporting the real economy?
How does financial services regulation interact with other forms of regulation in supporting real economy growth? What are the key areas of interaction and dependency?

Research topics in scope

Proposed research topics should address the gaps under the 3 research themes outlined above. These are broad topic areas. We don’t expect participants to follow each gap to the letter if they believe there are other areas to research. Nor do we expect each research proposal to cover all gaps or research themes; we expect proposals to be suitably targeted and scoped, to ensure the area of focus is sufficiently investigated.

We’d be happy to chat to prospective participants to test the research topic scope.

We’re interested in multidisciplinary approaches that draw on the available empirical evidence and a robust literature. Given the relatively short time frame for the research, we do not expect significant new research to be undertaken or major empirical analysis – although it encourages innovative approaches to drawing insights from the existing literature.

We don’t expect to provide any data for researchers.

Research topics out of scope

This competition is focused primarily on growth, competitiveness and regulation in UK financial services markets. As such, research proposals should look to focus on areas we have regulatory powers to influence change. Areas such as fiscal or monetary policy or labour market issues are out of scope.

Awards and next steps

We expect to award 4 participants up to £30,000 each for research projects to be completed over approximately 3 months (ending no later than 31 March 2025).

Participants may also have the opportunity to present their work to senior FCA leaders and other key stakeholders.

The competition will be administered and overseen by the chief economist of the FCA. Successful participants will be expected to provide regular updates to the chief economist or her delegates (online or in person) and may be asked on occasion to present to a wider set of stakeholders.

We’ll provide comments on drafts of the final report, but the responsibility for its contents will remain with the participants.

Eligibility

There are no eligibility requirements. Any individual, any type of institution and any consortia of individuals or institutions are eligible to apply.

We may be able to provide limited support to researchers in the form of analytical assistance and stakeholder contacts. Please get in touch to discuss this beforehand.

Selection criteria

The selection of successful research projects will be made by a commission of expert practitioners and researchers in financial services and economics. The commission will consider a proposal’s:

Likely contribution to answering the FCA’s key questions.
Interdisciplinarity and innovation in proposed methods.
Prior knowledge and experience of the issues.

The selection will be made by a commission of industry experts and practitioners:

Kate Collyer, FCA chief economist.
Professor Julia Black, president of the British Academy, warden of Nuffield College, Oxford and external member of the PRA.
Dr Felix Martin, chair of the FCA CBA Panel.
Dr Tim Leunig, visiting professor in practice, LSE.

How to apply

Please follow the steps below:

Access our procurement system[3].
Register yourself as a supplier, following the instructions on the portal.
Once you have registered, click the ‘Find Opportunities’ button on the landing page and search for ‘Economic Research Competition’ in the search bar.
Click on the Economic Research Competition tender and follow the instructions outlined. The tender includes all relevant documentation, including an application form.
Please submit your application through the portal by 11.59pm on 15 December 2024.

Contact us

Please contact us with any questions by sending a message through the tender opportunity on our procurement system[4].

27/11/2024 : Link changed update to application link.

First published: 25/11/2024 Last updated: 27/11/2024 See all updates