Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-23T07:00:53.791Z Has data issue: false hasContentIssue false
  • English
  • Français

The FinTech Revolution and Financial Regulation: The Case of Online Supply-Chain Financing

Published online by Cambridge University Press:  15 March 2017

Chang-hsien TSAI  and
Kuan-Jung PENG
Chang-hsien TSAI
Affiliation:
Institute of Law for Science and Technology, National Tsing Hua University, Taiwan
Kuan-Jung PENG
Affiliation:
Erasmus University Rotterdam, The Netherlands University of Hamburg, Germany University of Bologna, Italy
Get access Rights & Permissions [Opens in a new window]

Abstract

Online supply-chain financing has been a relatively novel funding channel for suppliers as small- and medium-sized enterprises (“SMEs”) to obtain loans in that the revolution of financial technology (“FinTech”) transforms traditional supply-chain financing, which used to be administered only by official banks, to an online model also used by electronic commerce platforms (“e-commerce platform”). Endeavours towards financial inclusion of the underserved SMEs could rationalize why we should allow for or encourage FinTech innovations exemplified by the online supply-chain financing mentioned above. What would be an adaptive regulatory regime for such innovative FinTech-enabled financial services as the online supply-chain financing? Within our conceptual framework to regulate the FinTech industry at the early stage, rather than rigorous rules traditionally placed on large financial institutions, a principles-based strategy should be adopted to strike a balance between financial stability and access to financial services advanced by disruptive innovations. As a necessary complement, regulatory sandboxes would be needed to spur a shift in institutional philosophy to a principles-based regulatory regime. In other words, the regulatory attitude of FinTech regulation should be humble and light-touch to promote innovation for improving digital financial inclusion, albeit on the premise of containing potential systemic risk and protecting consumer interest in the meantime.

Keywords

financial disintermediationfinancial inclusionprinciples-based regulationregulatory sandboxlight-touch/humble regulationfinancial technology
Type
Law and Finance in (South)East Asia
Information
Asian Journal of Law and Society , Volume 4 , Issue 1 , May 2017 , pp. 109 - 132
Copyright
© Cambridge University Press and KoGuan Law School, Shanghai Jiao Tong University 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Armour, John, Awrey, Dan, Davies, Paul, Enriques, Luca, Gordon, Jeffery N., Mayer, Colin, & Payne, Jennifer (2016) Principles of Financial Regulation, Oxford, UK: Oxford University Press.CrossRefGoogle Scholar
Arner, Douglas W., Barberis, Janos Nathan, & Buckley, Ross P. (2015) “The Evolution of FinTech: A New Post-Crisis Paradigm?,” University of Hong Kong Faculty of Law Research Paper No. 2015/047; UNSW Law Research Paper No. 2016–62, online <http://ssrn.com/abstract=2676553> (last accessed 8 October 2016).+(last+accessed+8+October+2016).>Google Scholar
Arner, Douglas W., Barberis, Janos Nathan, & Buckley, Ross P. (2016) “FinTech, RegTech and the Reconceptualization of Financial Regulation.” Northwestern Journal of International Law & Business (forthcoming).Google Scholar
Auboin, Marc, Smythe, Harry, & Teh, Robert (2016) “Supply Chain Finance and SMEs: Evidence from International Factoring Data,” CESifo Working Paper Series No. 6039, online <https://ssrn.com/abstract=2845280> (last accessed 22 October 2016).+(last+accessed+22+October+2016).>Google Scholar
Avgouleas, Emilios (2015) “Regulating Financial Innovation,” in N. Moloney, E. Ferran & J. Payne, eds., The Oxford Handbook of Financial Regulation, Oxford, UK: Oxford University Press, 659–689.Google Scholar
Awrey, Dan (2011) “Regulating Financial Innovation: A More Principles-Based Proposal?” 5 Brooklyn Journal of Corporate, Financial & Commercial Law 273–315.Google Scholar
Baldwin, Robert, Cave, Martin, & Lodge, Martin (2012) Understanding Regulation: Theory, Strategy, and Practice, Oxford: Oxford University Press.Google Scholar
Barr, Michael S., Jackson, Howell E., & Tahyar, Margaret E. (2016) Financial Regulation: Law and Policy, New York: Foundation Press.Google Scholar
Brummer, Chris, & Gorfine, Daniel (2014) FinTech: Building a 21st Century Regulator’s Toolkit, Santa Monica: Milken Institute.Google Scholar
Cable, Abraham J.B. (2015) “Institutionalized Disruption: The Rise of the Reformer Startup.” 12 Hastings Business Law Journal 1–13.Google Scholar
Cao, Lei, & Qian, Hai Li (2016) FinTech Jin Rong Ke Ji Ge Ming: Gai Bian Ni Wo Xiao Fei, Li Cai, Bao Xian Yu Jie Dai De Wei Lai [The FinTech Revolution: Changing Our Future of Consuming, Investment, Insurance and Lending], Taipei, Taiwan: Business Weekly Press.Google Scholar
Carnell, Richard, Scott, Jonathan R. Macey, & Miller, Geoffrey P. (2013) The Law of Financial Institutions, New York: Aspen Publishers.Google Scholar
Chiu, Iris H.-Y. (2016) “The Disruptive Implications of Fintech: Policy Themes for Financial Regulators,” online <http://ssrn.com/abstract=2812667> (last accessed 8 October 2016).+(last+accessed+8+October+2016).>Google Scholar
Coates, Rosemary (2015) “Chinese Shadow Banking and the Rise of the Bank of Foxconn,” Supply China Management Review, 30 November.Google Scholar
Dou, Eva, & Wong, Gillian (2015) “Bank of Foxconn: iPhone Maker Is Latest to Push Into China Financial Services,” The Wall Street Journal, 20 November.Google Scholar
Dyal-Chand, Rashmi (2015) “Regulating Sharing: The Sharing Economy as an Alternative Capitalist System.” 90 Tulane Law Review 241–309.Google Scholar
Enriques, Luca, & Gilotta, Sergio (2015) “Disclosure and Financial Market Regulation,” in N. Moloney, E. Ferran & J. Payne, eds., The Oxford Handbook of Financial Regulation, Oxford: Oxford University Press, 511–536.Google Scholar
Fenwick, Mark, Kaal, Wulf A., & Vermeulen, Erik P.M. (2016) “Regulation Tomorrow: What Happens when Technology Is Faster than the Law?,” Lex Research Topics in Corporate Law & Economics Working Paper No. 2016–8; U of St. Thomas (Minnesota) Legal Studies Research Paper No. 16–23; TILEC Discussion Paper No. 2016–024, online <https://ssrn.com/abstract=2834531> (last accessed 18 October 2016).+(last+accessed+18+October+2016).>Google Scholar
Financial Conduct Authority (2015) “Regulatory Sandbox,” online <https://www.fca.org.uk/publication/research/regulatory-sandbox.pdf> (last accessed 1 October 2016).+(last+accessed+1+October+2016).>Google Scholar
Fontana, Andrea, & Frey, James (1994) “Interviewing: The Art of Science,” in N.K. Denzin & Y.S. Lincoln, eds., Handbook of Qualitative Research, Thousand Oaks: Sage Publications, 361–376.Google Scholar
Foxconn.com (2016) “Hon Hai Precision Industry Co., Ltd.,” online <http://www.foxconn.com.tw/index_En.html> (last accessed 27 September 2016).+(last+accessed+27+September+2016).>Google Scholar
Fung Business Intelligence Centre (2015) “China’s E-Commerce Players and Retailers Are Tapping into the Burgeoning Internet Finance Sector,” online <https://www.fbicgroup.com/sites/default/files/China’s%20E-commerce%20Players%20and%20Retailers%20are%20Tapping%20into%20the%20Burgeoning%20Internet%20Finance%20Sector-AUG.2015.pdf> (last accessed 1 October 2016).+(last+accessed+1+October+2016).>Google Scholar
GPFI (2016) “G20 High-Level Principles for Digital Financial Inclusion,” online <http://www.gpfi.org/sites/default/files/documents/G20%20High%20Level%20Principles%20for%20Digital%20Financial%20Inclusion%20-%20Full%20version-.pdf> (last accessed 1 October 2016).+(last+accessed+1+October+2016).>Google Scholar
JD.com (2016) “JD,” online <http://www.joybuy.com/> (last accessed 27 September 2016).+(last+accessed+27+September+2016).>Google Scholar
Jingbaobei.com (2016) “Jingbaobei,” online <https://loan.jd.com/scf/> (last accessed 27 September 2016).+(last+accessed+27+September+2016).>Google Scholar
Jingxiaodai.com (2016) “Jingxiaodai,” online <https://loan.jd.com/home.htm> (last accessed 27 September 2016).+(last+accessed+27+September+2016).>Google Scholar
Juurikkala, Oskari (2012) “The Behavioral Paradox: Why Investor Irrationality Calls for Lighter and Simpler Financial Regulation.” 18 Fordham Journal of Corporate & Financial Law 51–93.Google Scholar
Lee, Julia Y. (2015) “Trust and Social Commerce.” 77 University of Pittsburgh Law Review 137–181.Google Scholar
Lin, Tom C.W. (2014) “The New Financial Industry.” 65 Albany Law Review 567–623.Google Scholar
Lin, Tom C.W. (2015) “Infinite Financial Intermediation.” 50 Wake Forest Law Review 643–669.Google Scholar
Monetary Authority of Singapore (2016) “MAS Proposes a ‘Regulatory Sandbox’ for FinTech Experiments,” online <http://www.mas.gov.sg/News-and-Publications/Media-Releases/2016/MAS-Proposes-a-Regulatory-Sandbox-for-FinTech-Experiments.aspx> (last accessed 26 November 2016).+(last+accessed+26+November+2016).>Google Scholar
MoneySuperMarket.com (2016) “Peer-to-peer Business Loans Explained,” online <https://www.moneysupermarket.com/business-finance/peer-to-peer-business-loans/> (last accessed 10 October 2016).+(last+accessed+10+October+2016).>Google Scholar
Moon, Bernard (2016) “Fintech Is Playing the Long Game,” TechCrunch, 5 June.Google Scholar
Philippon, Thomas (2016) “The FinTech Opportunity,” NBER Working Paper No. 22476, online <http://www.nber.org/papers/w22476> (last accessed 8 October 2016).+(last+accessed+8+October+2016).>Google Scholar
PwC (2014) “Managing Risks: Supply Chain Finance,” online <http://www.pwc.com/us/en/risk-management/assets/supply-chain-finance.pdf> (last accessed 31 August 2016).+(last+accessed+31+August+2016).>Google Scholar
Schwarcz, Steven L. (2013) “Regulating Shadows: Financial Regulation and Responsibility Failure.” 70 Washington & Lee Law Review 1781–1825.Google Scholar
Shen, Wei (2015) “Wealth Management Products in the Context of China’s Shadow Banking: Systemic Risk, Consumer Protection and Regulatory Instruments.” 23 Asia Pacific Law Review 55–85.Google Scholar
Shen, Wei (2016) Shadow Banking in China: Risk, Regulation and Policy, Cheltenham: Edward Elgar Publishing Limited.Google Scholar
Soo, Zen (2016) “China’s Alibaba Partners with Banks, Agencies to Introduce B2B Financing and Rating Services,” South China Morning Post, 13 January.Google Scholar
Sunstein, Cass R. (2013) Simpler: The Future of Government, New York: Simon & Schuster.Google Scholar
The Economist (2015) “The Fintech Revolution: A Wave of Startups Is Changing Finance—for the Better,” The Economist, 9 May.Google Scholar
Tsai, Chang-hsien (2010) “Demand and Supply Forces in the Market for Law Interplaying through Jurisdictional Competition: Basic Theories and Cases.” 1 East Asian Law Journal 1–27.Google Scholar
Tsai, Chang-hsien (2016) “Legal Transplantation or Legal Innovation? Equity Crowdfunding Regulation in Taiwan after Title III of the U.S. JOBS Act.” 34 Boston University International Law Journal 233–277.Google Scholar
UK Government Chief Scientific Adviser (2015) “FinTech Futures: The UK as a World Leader in Financial Technologies,” online <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413095/gs-15–3-fintech-futures.pdf> (last accessed 1 October 2016).+(last+accessed+1+October+2016).>Google Scholar
Wang, Tao (2014) “Jing Dong Jin Rong Shang Xian Jing Xiao Dai Wei Ping Tai Shang Jia Rong Zi” [“JD Finance Launched ‘Jingxiaodai’, Making Loans to Merchants on Its Platform”], Xinhuanet.com, 31 October.Google Scholar
Webley, Lisa (2013) “Qualitative Approaches to Empirical Legal Research,” in P. Cane & H.M. Kritzer, eds., The Handbook of Empirical Legal Research, Oxford: Oxford University Press, 927–940.Google Scholar
Wen, Typhoon (2016) “FinTech Chuang Xin Chan Ye Ying Yong—Gong Ying Lian Jin Rong O2O Cheng Gong Mo Shi” [“The Innovative Applications in FinTech Industries: The Successful O2O Model of Supply Chain Financing”], presented at 2016 FinTech and Management Symposium, National Tsing Hua University, 24 September 2016.Google Scholar
Xiang, Tracey (2016) “Why Is Every Chinese Tech Company Doing Online Finance?,” Technode, 30 March.Google Scholar
Yang, Dong, & Wen, Cheng Gong (2016) Hu Lian Wang Jia Jin Rong Deng Yu Zhong Chou Jin Rong [Internet + Finance=We Finance], Beijing: People’s Publishing House.Google Scholar
Yin, Robert K. (2011) Qualitative Research: From Start to Finish, New York: The Guilford Press.Google Scholar