Banks have capital requirements. Th

Banks have capital requirements. These capital requirements increase the cost of products for banks if these products involve balance sheet assets (see, e.g., DeAngelo and Stulz, 2015). Before the global financial crisis, only the banking subsidiary of a bank holding company was subject to a capital requirement that did not depend on the riskiness of assets, a leverage ratio requirement, in addition to a requirement that depended on the riskiness of assets, a risk-based capital requirement. More recently, however, bank holding companies have become subject to a leverage ratio requirement, which is a capital requirement that is proportional to the size of the assets of a bank (with some exceptions). This means that customer balances of a subsidiary are subject to a capital requirement for a bank, but not a Fintech firm.