Financial Regulation International (2015), Vol 18(9), pp.1-13, London: Informa Law. ISSN 1473-3323, Nov 1, 2015
Mr Ding Hui, the chairman and chief executive of a Hong Kong-listed fashion retailer, Fujian Nuoq... more Mr Ding Hui, the chairman and chief executive of a Hong Kong-listed fashion retailer, Fujian Nuoqi Co Ltd, suddenly went missing in July 2014. As a result, the company’s share price slumped by more than 50% in three consecutive days. It remained mysterious about Mr Ding’s motivation for abandoning his business empire, but later on news report revealed that the incident had something to do with his enormous debts owed to several moneylenders. In China, the state-dominated banking sector is reluctant to lend to private-owned businesses, so entrepreneurs often have to borrow money from shadow banks to fund their business ventures. According to one estimate, the market scale of China’s informal financial system amounted to 5 trillion yuan (US$806 billion). However, in absence of regulation, private lending led to a series of credit crisis in recent years, which has been evidenced by an increasing number of insolvent businesses and runaway bosses. In response to this, the Chinese authority has launched a series of financial reform in order to effectively regulate the rampant lending market and improve the availability of credits for money-starved entrepreneurs. Most recently, China’s first financial regulation regarding private lending, “Wenzhou Private Financing Regulation”, came into effect in 2014, which created a registration-based regulatory regime. This article aims to examine the popular phenomenon of runaway bosses in China. It will try to find out why the private lending mechanism inevitably led to credit crunches and fugitive bosses recently, as well as to analyse the tentative regulatory system regarding private financing.
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French Abstract: Les petites et moyennes entreprises (PME) jouent un roˆle de ́terminant dans la plupart des e ́conomies europe ́ennes. Au Royaume-Uni, les PME repre ́sentent 99,9 % du nombre total d’entreprises, 60 % des emplois dans le secteur prive ́ et 50 % du PIB. Cependant, elles ne rec ̧oivent que 17 % du total des preˆts accorde ́s aux entreprises par le secteur bancaire alors que 83 % des preˆts sont accorde ́s aux grandes entreprises, les banques ayant une aversion marque ́e pour le risque depuis la crise financie`re mondiale. Pendant ce temps, le Royaume-Uni a connu une soi- disant re ́volution de la technologie financie`re au cours des dernie`res anne ́es avec l’e ́mergence d’un marche ́ des capitaux non traditionnel ou` des milliards de livres sont preˆte ́es chaque anne ́e aux PME. Le financement non traditionnel et la technologie financie`re pourraient sans doute re ́soudre les proble`mes de financement des PME a` long terme. Dans ce contexte, le pre ́sent article aborde et analyse le marche ́ du preˆt en ligne entre particuliers et les nouvelles banques nume ́riques au Royaume-Uni, et explique comment le financement non traditionnel est en train de combler les besoins de financement des PME. Il commente e ́galement les politiques et le cadre re ́glementaire du Royaume-Uni concernant le marche ́ naissant du financement non traditionnel.
Key Points:
● 2017 has witnessed a so-called bitcoin bubble, as entrepreneurs and professional investors rushed into the market to take a bet on the upcoming cryptocurrency age. The price of a bitcoin exceeded $19,300 in December 2017, worth only $0.06 in July 2010.
● The popularity of bitcoin mining and trading activities has raised legal and regulatory concerns pertaining to anti-money laundering, evasion of forex regulations, the illegal fundraising of start-ups by Initial Coin Offerings (ICOs), as well as a potential financial crisis.
● Global financial regulators have acted proactively to regulate bitcoin. Most recently, China, once accounting for 90% of bitcoin trading volume, issued an immediate ban of ICOs and ordered the reorganisation of three major bitcoin exchanges: OKCoin, Huobi and BTCC. Over-The-Counter (OTC) transactions have not been affected.
● Financial authorities in certain countries have been testing state-backed cryptocurrencies.
Key points:
- Backed by the e-commerce giant Alibaba, Alipay has become the world’s largest mobile payment system. Together with Wechat Pay, they dominate China’s $5.7trn mobile payment sector. Alipay has a presence in over 70 countries including the UK, US, Japan, South Korea and Australia.
- Due to the popularisation of mobile payment facilities, many Chinese cities have become a cashless (and cardless) society, as 40% of Chinese people carry almost no cash when going out.
- Alipay relies on the Quick Response code (or QR code) technology, in contrast to the Near Field Communication (NFC) adopted by competitors like Apple Pay.
- Mobile payments and fintech have provoked debate as to legal and regulatory issues such as the regulatory approval regime, data protection, fund security and fintech financing. Most recently, China has set up a unified clearing house for all mobile payment service providers to strengthen the industry supervision.
French Abstract: Les petites et moyennes entreprises (PME) jouent un roˆle de ́terminant dans la plupart des e ́conomies europe ́ennes. Au Royaume-Uni, les PME repre ́sentent 99,9 % du nombre total d’entreprises, 60 % des emplois dans le secteur prive ́ et 50 % du PIB. Cependant, elles ne rec ̧oivent que 17 % du total des preˆts accorde ́s aux entreprises par le secteur bancaire alors que 83 % des preˆts sont accorde ́s aux grandes entreprises, les banques ayant une aversion marque ́e pour le risque depuis la crise financie`re mondiale. Pendant ce temps, le Royaume-Uni a connu une soi- disant re ́volution de la technologie financie`re au cours des dernie`res anne ́es avec l’e ́mergence d’un marche ́ des capitaux non traditionnel ou` des milliards de livres sont preˆte ́es chaque anne ́e aux PME. Le financement non traditionnel et la technologie financie`re pourraient sans doute re ́soudre les proble`mes de financement des PME a` long terme. Dans ce contexte, le pre ́sent article aborde et analyse le marche ́ du preˆt en ligne entre particuliers et les nouvelles banques nume ́riques au Royaume-Uni, et explique comment le financement non traditionnel est en train de combler les besoins de financement des PME. Il commente e ́galement les politiques et le cadre re ́glementaire du Royaume-Uni concernant le marche ́ naissant du financement non traditionnel.
Key Points:
● 2017 has witnessed a so-called bitcoin bubble, as entrepreneurs and professional investors rushed into the market to take a bet on the upcoming cryptocurrency age. The price of a bitcoin exceeded $19,300 in December 2017, worth only $0.06 in July 2010.
● The popularity of bitcoin mining and trading activities has raised legal and regulatory concerns pertaining to anti-money laundering, evasion of forex regulations, the illegal fundraising of start-ups by Initial Coin Offerings (ICOs), as well as a potential financial crisis.
● Global financial regulators have acted proactively to regulate bitcoin. Most recently, China, once accounting for 90% of bitcoin trading volume, issued an immediate ban of ICOs and ordered the reorganisation of three major bitcoin exchanges: OKCoin, Huobi and BTCC. Over-The-Counter (OTC) transactions have not been affected.
● Financial authorities in certain countries have been testing state-backed cryptocurrencies.
Key points:
- Backed by the e-commerce giant Alibaba, Alipay has become the world’s largest mobile payment system. Together with Wechat Pay, they dominate China’s $5.7trn mobile payment sector. Alipay has a presence in over 70 countries including the UK, US, Japan, South Korea and Australia.
- Due to the popularisation of mobile payment facilities, many Chinese cities have become a cashless (and cardless) society, as 40% of Chinese people carry almost no cash when going out.
- Alipay relies on the Quick Response code (or QR code) technology, in contrast to the Near Field Communication (NFC) adopted by competitors like Apple Pay.
- Mobile payments and fintech have provoked debate as to legal and regulatory issues such as the regulatory approval regime, data protection, fund security and fintech financing. Most recently, China has set up a unified clearing house for all mobile payment service providers to strengthen the industry supervision.