A critical analysis of the regulation of crowdlending : a local perspective

Abstract

This thesis critically analyses the problems that came about following the 2008 financial crisis, and the effects of such problems on enterprising individuals and SMEs. There were a number of solutions to the finance gap created, and these options will be briefly discussed before then analysing thoroughly the role crowd funding, and especially Crowdlending has played in finance. The thesis exposes the lack of legislative preparedness for the introduction of such a Crowdlending model in Malta, and also the reluctance of Maltese to venture for alternative means of financing and the use of FinTech. Crowdlending is an international solution offered to the global problem of the finance gap and this thesis has delved into the different ways various jurisdictions have gone about regulating such a sector and what prompted the regulation of such a sector. The UK, which has the most advanced regulatory system, is discussed in depth to see what led to unrelenting growth in the sector in conjunction with successful regulation. The thesis then elicits the benefits and disadvantages that arise when regulating such a sector. Crowdlending utilizes technology to offer financial services and hence there is the predominant possibility of cross-border transactions taking place and jurisdictional issues may arise. The different cross-border scenarios that may arise are analysed to see how current regulation would apply to such scenarios. The thesis then sets out a number of regulatory proposals that could facilitate the introduction of Crowdlending in Malta, besides setting out the need to regulate as a means to kick-start the sector and as a means to offer another solution to access financing in Malta. The mitigation of risk, by building trust, and facilitating such investment is a vital factor that could lead to increased economic growth.