Student Led Research on FinTech Regulations and SME Financing Published by World Economic Forum, Real Clear Markets
A student-led research white paper on the complex regulatory landscape for FinTech lending and the implications for small and medium-sized enterprises was recently published by the World Economic Forum and featured in Real Clear Markets.
The paper outlines the regulatory hurdles marketplace lenders (MPLs) - any non-bank entity that provides money to individuals or businesses through online services – face in three of the world’s largest FinTech markets. The United States, the United Kingdom, and China have all taken different approaches to regulating marketplace lenders, despite the inherently borderless nature of the FinTech industry. For example, in the U.S., consumer and business lending are regulated by Consumer Financial Protection Bureau (CFPB) and Securities and Exchange Commission (SEC) respectively, while in the UK, it is the Financial Conduct Authority (FCA) which now regulates the consumer credit. On the other hand, in China, the platforms were until recently un-supervised. The China Banking Regulatory Commission (CBRC) now regulates the industry by treating the platforms as “infomediaries” and does not allow them to assess a borrower’s creditworthiness. Some other countries do not even have a regulatory body responsible for marketplace lending.
The paper also focuses on the impact these regulations may have on SMEs, which are some of the main beneficiaries of the FinTech movement. FinTech is increasingly viewed as a potential solution for the credit gap that SMEs often face around the world, raising questions about how to lend to small businesses that often exist in challenging environments.
The Georgetown research team shared their findings at a roundtable discussion in April. The full research paper is available here, and a blog post drafted by Hilary Halpern (MBA ‘17) for the World Economic Forum on the subject can be read here.