Trade finance in East Asia - potential responses to the shortfall

The crisis of 2008 saw many European banks reduce their provision of trade finance in East Asia. Notwithstanding the actions of the G20 and other bodies to redress this, a substantial shortfall in trade finance facilities in the region remains. This article explores the development of this shortfall, and analyses potential responses to it. These responses range from some much-needed further revisions to the Basle III rules, to deepening of cross-border cooperation, creating a ring-fenced liquidity pool for trade finance, encouraging co-financing among the various providers of trade finance both private and public, and establishing a regional trade finance database. In addition, the article ponders the likelihood of China’s banks beginning to take a substantial role in providing trade finance to the region. Trade finance offers China’s banks a low risk means of expanding into international business, and offers China a way to provide the sort of important service to its region that regional leaders typically seek to provide.postprin

The Evolution of FinTech: A New Post-Crisis Paradigm?

'Financial technology' or 'FinTech' refers to technology enabled financial solutions. FinTech is often seen today as the new marriage of financial services and information technology. However, the interlinkage of finance and technology has a long history and has evolved over three distinct eras. FinTech 1.0, from 1866 to 1987, was the first period of financial globalization supported by technological infrastructure such as transatlantic transmission cables. This was followed by FinTech 2.0, from 1987 to 2008, during which financial services firms increasingly digitized their processes. Since 2008 a new era of FinTech has emerged in both the developed and developing world. This era is defined not by the financial products or services delivered but by who delivers them. This latest evolution of FinTech, led by start-ups, poses challenges for regulators and market participants alike, particularly in balancing the potential benefits of innovation with the possible risks of new approaches.preprin

From FinTech to TechFin: The Regulatory Challenges of Data-Driven Finance

Financial technology (‘FinTech’) is transforming finance and challenging its regulation at an unprecedented rate. Two major trends stand out in the current period of FinTech development. The first is the speed of change driven by the commoditization of technology, Big Data analytics, machine learning and artificial intelligence. The second is the increasing number and variety of new entrants into the financial sector, including pre-existing technology and e-commerce companies. This paper considers the impact of these new entrants with their typically large pre-existing non-financial services customer bases. These firms (loosely termed ‘TechFins’) may be characterised by their capacity to leverage the data gathered in their primary business into financial services. In other words, TechFins represent an Uber moment in finance. This shift from financial intermediary (FinTech) to data intermediary (TechFin) raises implications for incumbent financial services firms, FinTech startups and regulators. This seachange calls for analysis to underpin regulatory approaches with a view to balancing the competing interests of innovation, development, financial stability and consumer protection.postprin

Sustainability, FinTech & Financial Inclusion

We argue financial technology (FinTech) is the key driver for financial inclusion, which in turn underlies sustainable balanced development, as embodied in the UN Sustainable Development Goals (SDGs). The full potential of FinTech to support the SDGs may be realized with a progressive approach to the development of underlying infrastructure to support digital financial transformation. Our research suggests that the best way to think about such a strategy is to focus on four primary pillars. The first pillar requires the building of digital identity, simplified account opening and e-KYC systems, supported by the second pillar of open interoperable electronic payments systems. The third pillar involves using the infrastructure of the first and second pillars to underpin electronic provision of government services and payments. The fourth pillar—design of digital financial markets and systems—supports broader access to finance and investment. Implementing the four pillars is a major journey for any economy, but one which has tremendous potential to transform not only finance but economies and societies, through FinTech, financial inclusion and sustainable balanced development

Friction and wear behavior of glasses and ceramics

Adhesion, friction, and wear behavior of glasses and ionic solids are reviewed. These materials are shown to behave in a manner similar to other solids with respect to adhesion. Their friction characteristics are shown to be sensitive to environmental constituents and surface films. This sensitivity can be related to a reduction in adhesive bonding and the changes in surficial mechanical behavior associated with Rehbinder and Joffe effects. Both friction and wear properties of ionic crystalline solids are highly anisotropic. With metals in contact with ionic solids the fracture strength of the ionic solid and the shear strength in the metal and those properties that determine these will dictate which of the materials undergoes adhesive wear. The chemical activity of the metal plays an important role in the nature and strength of the adhesive interfacial bond that develops between the metal and a glass or ionic solid

The ICO Gold Rush: It's a Scam, It's a Bubble, It's a Super Challenge for Regulators

Initial coin offerings typically use blockchain technology to offer tokens that confer some rights in return, most often, for cryptocurrency. They can be seen as effectively a conjunction of crowdfunding and blockchain. Based on a handselected database comprising more than a hundred ICOs we provide a taxonomy of ICOs to facilitate thinking clearly about them, analyse the various regulatory challenges they pose, and suggest the first steps regulators should consider in responding to them. At the moment, many ICOs are offered on the basis of utterly inadequate disclosure of information, and the decision to invest in them often cannot be the outcome of a rational calculus. Many of the hallmarks of a classic speculative bubble are present in many, but certainly not all, ICOs. At the same time, ICOs provide a new and innovative structure for raising funds to support new and innovative ideas and ventures, with the potential for aspects of the underlying structures to have an important impact on fundraising systems and structures in future.published_or_final_versio

Internalisation Theory and outward direct investment by emerging market multinationals

The rise of multinational enterprises from emerging countries (EMNEs) poses an important test for theories of the multinational enterprise such as internalisation theory. It has been contended that new phenomena need new theory. This paper proposes that internalisation theory is appropriate to analyse EMNEs. This paper examines four approaches to EMNEs—international investment strategies, domestic market imperfections, international corporate networks and domestic institutions—and three case studies—Chinese outward FDI, Indian foreign acquisitions and investment in tax havens—to show the enduring relevance and predictive power of internalisation theory. This analysis encompasses many other approaches as special cases of internalisation theory. The use of internalisation theory to analyse EMNEs is to be commended, not only because of its theoretical inclusivity, but also because it has the ability to connect and to explain seemingly desperate phenomena

A retrospective and agenda for future research on Chinese outward foreign direct investment

Our original paper “The determinants of Chinese Outward Foreign Direct Investment” was the first theoretically based empirical analysis of the phenomenon. It utilised internalisation theory to show that Chinese state-owned firms reacted to home country market imperfections to surmount barriers to foreign entry arising from naivety and the lack of obvious ownership advantages, leveraging institutional factors including favourable policy stimuli. This special theory explained outward foreign direct investment (OFDI) but provided surprises. These included the apparent appetite for risk evinced by these early investors, causing us to conjecture that domestic market imperfections, particularly in the domestic capital market, might be responsible. The article stimulated a massive subsequent, largely successful, research effort on emerging country multinationals. In this Retrospective article we review some of the main strands of research that ensued, for the insight they offer for the theme of our commentary. Our theme is that theoretical development can only come through embracing yet more challenging, different, and new contexts, and we make suggestions for future research directions