Financial regulation in the age of the platform economy

Platform businesses allow for collaboration with nontraditional partners and bring together different categories of customers, in the financial context savers and investors or lenders and borrowers, creating large, scalable networks of users. Their entry into finance promises potential benefits to consumers in the form of new products, lower prices, wider choice, and enhanced consumer experience. At the same time, their new business models and technologies potentially threaten the dominant position of traditional financial services providers and create challenges for regulators. Platform businesses can use their preferential access to customer data to skim off high-quality loans, leaving only low-quality customers for other lenders. Their ability to offer complementary nonfinancial services that cannot be supplied by FinTech start-ups and banks can make it difficult or unattractive for customers to switch to alternative providers. This danger is especially acute when BigTech firms have monopoly power in other markets that complement financial services.

The case for private administration of deposit guarantee schemes

We make the case that the responsibility for appointing board members in Deposit Guarantee Schemes (DGS) for commercial banks should be entrusted to the industry. In doing so, we challenge the position adopted by the International Monetary Fund, which has proposed public DGSs as the best practice. We lay out the comparative advantages of private over public DGS administration, and contend that the role of the government should in principle be limited to regulating DGSs specifically and financial markets in general. We conclude that the current worldwide trend towards greater involvement of government in financial regulation should not be extended to the administration of DGSs.

Regtech: Bits and Bytes of Financial Regulation

Global Financial Crisis of 2008 has caused dramatic structural changes in the financial sector and financial services worldwide. Technological disruption has changed the dimension of finance around the world. Increasing threats of cyber-attacks has raised a serious concern for the banking and financial sector across the entire world. Supervisory mechanisms, compliances and regulations have become the key factors of consideration. The paper stresses out an importance of stringent financial regulations and regulatory compliance in the recent era of technological changes and innovations towards financial stability. This paper attempts to establish a strong theoretical overview of the promise and potential of the Regulatory Technologies (RegTech) for the wider financial ecosystem based on existing academic research and also publicly available practice-oriented insights from industry sources. The purpose of this paper is to develop an insight about the implications of RegTech for financial institutions and regulation. This study will help regulatory standard setters, bankers, investors, national & international financial institutions and other academicians to envisage the future of disruptive potential in financial technology.

Financial regulation as a way to ensure the volume and optimization of the composition of investment financing sources in imperfect markets

Subject. This article considers financial regulation as a way to ensure the volume and optimization of the composition of sources of financing investment in imperfect markets. Objectives. The article aims to find out how financial regulation contributes to ensuring the volume of investment financing in imperfect markets and how to optimize investment financing sources, and identify other aspects of ensuring the sustainability of financing investment projects in oil production in the face of short-term constraints in financial markets. Methods. For the study, I used content, statistical, and economic analyses. Results. The article shows that the choice of sources of financing investments in oil production is actualized primarily by the fact that in each specific period of time (for example, a fiscal year), an investment entity needs to finance the relevant investments, taking into account the "matrix" and continuing nature of investments in oil production, and regularly invest a certain amount of money. Conclusions. If the investment market situation is unfavorable, asymmetry gets manifested in some cases. The mechanisms of perfect financial markets, which generally contribute to a certain balancing of investment financing sources, at the same time do not guarantee a deterrent to the cost of financing. And, on the contrary, these mechanisms can affect significant fluctuations, if the main attribute of the instability of the investment market is the lack of liquidity.