1,721,230 research outputs found
Microfinance in China : the postal bank and credit cooperatives as key players
No full textThis thesis discusses microfinance in China. Microfinance is a subset of inclusive finance and for the purpose of this thesis is defined as loans of an average size of up to RMB 100,000. Microfinance is a proven poverty alleviation tool, but in China it is underdeveloped.
Until 2005, China had no legal framework to enable the development of microfinance. To the contrary, the General Rules for Loans demand any entity conducting lending activities to be licensed as a financial institution. Nonetheless, by then, NGOs were operators of microfinance programs, strictly speaking operating illegally. Independent of the illegality, NGO-operated microfinance programs are generally considered to be not the future for microfinance in China, by reason of their lack of funding and management capability.
Between 2005 and 2008, regulations were promulgated enabling the creation of new types of financial institutions targeted at serving rural areas better – Village and Township Banks (VTBs), Bank Wholly-owned Lending Subsidiaries (BLSs) and Rural Mutual Credit Cooperatives (RMCCs). During this period, a type of non-deposit taking microcredit company (MCC) was also enabled. In 2007, the Postal Savings Bank of China (PSBC) was incorporated with a mandate of providing for microfinance.
Of all the enabled institutions, VTBs, BLSs and MCCs are more interested in loans of sizes larger than the defined scope of microfinance. That leaves PSBC and RMCCs, as the strongest candidates of potential. PSBC is already by far the largest microfinance operator in China and has the potential to keep that position. PSBC has the distant advantage of a large deposit base, providing the necessary stream of funding for microfinance. RMCCs are cooperatives in nature, with the benefit of having members’ deposits providing the funds needed for lending internally. With more than 800,000 villages and townships in China, the potential for RMCCs is huge, subject to the authorities reopening applications for RMCCs, which for unknown reasons stopped since mid-2012.
This thesis also visits the Peer-to-Peer lending platform because the same has been misunderstood as an alternative to NGO-operated schemes. Such thoughts are dismissed but the possibility of employing the same platform for a government sponsored microfinance program is raised.
One of the keys to better microfinance development lies in having adequate funding. PSBC and RMCCs are good in this respect. Microfinance is a sustainable business and if this fact is accepted by large commercial banks, the funding issue will in all likelihood be largely resolved. This thesis therefore proposes an apex fund whereby the 10 largest listed banks in China are to each have 0.10 percent of their loan portfolios applied in microfinance related activities. Any shortfall could be directed to go into an apex fund, for investment through PSBC.
Another key to better microfinance development is the availability of know-how. This thesis sees this as the weakest aspect in China’s microfinance development and urges the apex fund to be responsible for the necessary training, funded initially by a PBOC contribution of RMB 1 Billion.published_or_final_versionLawDoctoralDoctor of Philosoph
Regulation of foreign mergers and acquisitions involving listed companies in the People's Republic of China
No full textpublished_or_final_versionabstractLawDoctoralDoctor of Philosoph
Regulating robo-advisors : the role of fiduciary duties
No full textFinancial market robo-advisors are computer systems that provide or support the provision of investment services, portfolio allocation and advice to investors. Consequently, they have generated concerns about potential risks they may raise for investors and financial markets. In particular, human finanical advisors have specific legal responsibilities to serve and protect their clients’ interests. These duties take a range of forms under both financial regulation and private law. In particular, human investment advisors have fiduciary duties to their clients under both financial regulation and private law. This thesis seeks to answer the main research question: Can fiduciary duties in the context of private law and financial regulation appropriately address the opportunities and risks presented by the development of robo-advisors? Can robo-advisors meet fiduciary duties in the same way as human investment advisors?
The first step of this thesis is to settle the basic question, “Can advanced artificial intelligence (AI) have legal personhood?” After passing the test of necessity, feasibility, and morality up to certain technical and rational standards, which is required to grant AI legal personhood, the thesis argues that robo-advisors should have the opportunity to obtain the legal status of fiduciaries due to the discretionary power they obtain when managing their clients’ assets if they meet the necessary requirements for legal personhood. Certain ethical requirements and compulsory insurance mechanisms are combined in the framework. However, for other less advanced robo-advisors, the institutions that develop, offer or use them should be restricted by fiduciary requirements.
Fiduciary governance has both private and public sides. Regarding fiduciary relationships, fiduciary duties, and fiduciary liabilities, the duty of loyalty and the duty of care are the core fiduciary principles from a private law perspective; nevertheless, different jurisdictions apply different approaches in interpreting and applying these principles. To make fiduciary principles easy to follow, these jurisdictions could learn from each other. From a public law perspective, as new risks and challenges occur with the application of AI-driven fintech products, regulators need to think about creating and updating prudent supervision regimes and generating the best innovation facilitators while also increasing their own use of technology for regulatory and supervisory purposes (Regtech and Suptech). Based on fiduciary requirements, financial governance of robo-advisors should confirm the principles applicable to robo-advisors, and adopt a proportional, pragmatic, prudential risk-based protective approach to investor protection and supervisory structure.
China and the United States adopt different approaches to the fiduciary financial supervision of robo-advisors. In China, robo-advisors have developed rapidly due to minimal market standards and regulations. DeFi (“decentralised finance”) robo-advisors, robo-advisors in traditional licensed institutions, and robo-advisors in startups face different dilemmas. Chinese regulators apply a financially inclusive strategy and penetrative supervision, but some of their regulations partially impede innovation. Although the United States has the most abundant robo-advisory products, it also faces noncompliance problems. With a basic framework of federal and state rules, the United States has established a comprehensive, autonomous, and economically efficient regulation system for fintech governance, yet regulatory uncertainty and fragmented organizational models still trouble both regulators and fintech institutions. With the ongoing development of robo-advisory products, both China and the United States must adjust their financial supervision approaches and try to explore a common supervisory governance approach to AI-driven fintech products.published_or_final_versionLawDoctoralDoctor of Philosoph
Can a more principles-based regulatory regime fill the regulatory gap in over-the-counter derivatives for end-users in Hong Kong?
No full textAbstract
“Can a More Principles-based Regulatory Regime Fill the Regulatory Gap in Over-the-counter Derivatives for End-Users in Hong Kong?”
Submitted by
Woo Kam Wah Alex
for the degree of Doctor of Legal Science
at The University of Hong Kong
in March 2019
The current regulations for over-the-counter (OTC) derivatives in Hong Kong have been inadequate in protecting the end-users of OTC derivatives products as exhibited by the huge financial losses due to derivatives transactions in the past two decades. Existing regulations rely heavily on detailed rules. They are neither unified nor sufficiently inclusive to tackle the complexity and innovations in the fast-moving derivatives market effectively. There have been regulatory changes made by the authorities addressing issues in the markets following various crises. However, the changes have not been effective as evidenced by the reoccurrences of issues. This thesis identifies the regulatory gaps in the regime and formulates a more principles-based regulatory model to better achieve the overall regulatory objectives, focusing on OTC derivatives transactions with non-professional end-users. There are four key weaknesses identified. Firstly, detailed rules are found to be unable to keep up with the market developments and the complexity of derivatives products. Secondly, the over-reliance on disclosure requirements, while important, does not effectively provide investor protection in many cases. Thirdly, the regulators are also found to have insufficient deterrence power. In addition, senior managers of the regulated members are not charged with enough accountability and responsibility to make the regulations effective. A regulatory model based on more principle-based regulations is formulated to tackle the regulatory gaps. This model advanced: (1) focuses on suitability; (2) puts the principle of treating customers fairly as its backbone; and (3) mandates the management accountability and responsibility as a legal requirement. Finally, the changes to the current regulations, which are needed in order to achieve an effective regulatory regime, are examined.published_or_final_versionLawMasterDoctor of Legal Studie
The dog that never barks? : examining the extent of regulatory competition : distributed ledger technology in financial services in Hong Kong, London, and New York
No full textThis research focuses on regulatory competition (RC) between the top international financial centres based on their regulation of financial technology (FinTech), specifically those underlined by distributed ledger technology (DLT). The increased use of FinTech represents an opportunity for governments to advance economic development, leading to more inclusive financial systems. DLT, as a nascent form of FinTech, may be applied broadly through a number of applications, potentially transforming multiple industries, specifically the financial services industry where DLT use-cases have been most prevalent. Given this potential, governments may engage in RC with one another to attract and retain economic activities to their jurisdictions, such as capital investment and human capital, particularly through their regulation of DLT products and services in their respective financial services industries.
This study addresses the research question: To what extent are Hong Kong, London, and New York engaged in RC with one another through their regulation of DLT Offerings in their respective jurisdictions? This study aims to identify the extent to which these jurisdictions have been influenced by RC, or the threat thereof, in their regulation of DLT Offerings. Further, it aims to identify how concerned legislative and regulatory texts and policy instruments in these jurisdictions have been formulated according to the influence of RC. As such, this study focuses primarily on the governmental actions and behaviours of these jurisdictions, specifically their legal, regulatory and policy-making competences, as they relate to the regulation of DLT products and services during the key periods of legislative and regulatory development of 2008-2022, as underlined by their institutional lens themes.
This study revealed that RC operated on a limited basis between the jurisdictions through a ‘siloed’ approach to RC. In this approach, the jurisdictions advanced their own competitiveness as against others, through a consideration of RC concerns, but absent largely any targeted adjustments to the legislative and regulatory rules governing DLT Offerings directed in specific response to the external competitive pressures. As such, RC operated as one factor influencing the legislative and regulatory development of the rules governing DLT Offerings. This ‘siloed’ approach to RC was evidenced on the basis of three underlying thematic observations, as informed by their respective identified patterns.
Most legal analyses have applied RC in the federal government context, whereas this study considers the RC in an international context by focussing on competition between the top international financial centres. It employs a qualitative ‘thicker’ analysis research design, in place of the usual quantitative approach employed in the RC literature, principally through econometric models. It is also framed within the law and innovation context which represents a novel approach since most studies have hitherto focussed on RC in the fields of, among others, corporate governance and environmental regulation. Finally, this study provides a systematic review of the RC hypothesis aimed to provide coherence and consistency to the RC literature by parsing apart its essential elements. In making these contributions, this study enhances our understanding of the field of financial regulation: law and policy.published_or_final_versionLawDoctoralDoctor of Philosoph
The integration of the mainland and Hong Kong securities markets
No full textpublished_or_final_versionLawDoctoralDoctor of Philosoph
The emerging fourth generation of Chinese BITs : implications for international investment and economic law
No full textChinese bilateral investment treaties (BITs) – focused on the protection of foreign investment – have evolved through three different generations in terms of form, structure and content. However, in 2013, China accepted pre-establishment national treatment and a negative list approach in the context of its BIT negotiations with the United States. This acceptance is having a crucial bearing on the development of Chinese BITs, as it marked the beginning of a new generation of Chinese BITs addressing both investment liberalization and investment protection. Therefore, the fourth generation of Chinese BITs seems to be emerging. This thesis presents a detailed study of the emerging fourth generation of Chinese BITs, arguing that this will have an important influence on international investment law and international economic law more generally: the fourth generation both reflects evolving trends in international investment law but also – given China’s role in the global economy – marks an important indication of shift of China from a rule taking to a rule leading role.
It is firstly argued that the fourth generation of Chinese BITs will be likely to provide pre-establishment national treatment on the basis of a negative list approach and rebalance the protection of foreign investment and the right of states to regulate. The acceptance of pre-establishment national treatment and a negative list approach has brought reform to China’s domestic regulatory framework for foreign investment, especially the approval of the New Foreign Investment Law in March 2019. This rebalancing would be achieved mainly through more limited definitions of investor and investment, clarification of fair and equitable treatment, clarification of indirect expropriation, inclusion of exception clauses and improvement of the investor-state dispute settlement mechanism.
Secondly, the fourth generation of Chinese BITs needs to be considered in the context of a global backlash against investment arbitration. Investment treaty reform has been undertaken at the national, bilateral, regional and multilateral levels. Against this background, the fourth generation of Chinese BITs could serve as China’s model in the rebalancing debate. Furthermore, China has been involved in a large number of bilateral and regional agreement negotiations for the consolidation of investment rules, and has actively participated in multilateral investment rule making initiatives, as reflected in the G20 Guiding Principles for Global Investment Policymaking and the multilateral framework on investment facilitation at the World Trade Organization.
Thirdly, the fourth generation of Chinese BITs suggests a mutual interaction between China and international investment law, which could be considered as part of the mutual interactions between China and international economic law. On the one hand, China’s participation in international economic law has had a great impact on domestic economic and legal reforms. The draft China-United States BIT and the 2019 New Foreign Investment Law are examples. On the other hand, China, as an emerging major economic power, impacts the development of international economic law. In the field of international investment law, China by and large has been evolving from a rule taker to a rule maker.
In sum, this thesis is a detailed examination of the emerging fourth generation of Chinese BITs and its implications for international investment and economic law.published_or_final_versionLawDoctoralDoctor of Philosoph
Data-driven innovations in payments : redesigning data frameworks and 'participatory governance'
No full textTechnology has always been pivotal to payment systems’ evolution. In recent times, the most radical digital transformations have been driven by new cutting-edge digital technologies which allow the embedding of payment services in otherwise non-financial digital services infrastructure. While data-driven innovations have spread throughout global payments systems, the most instructive applications are, unarguably, noticeable among new non-bank entrants in retail payments, in particular multilateral digital payment platforms such as Alibaba, Tencent, Apple and Google. These vibrant data-driven actors are able to leverage their established digital services architecture in providing complementary alternative payment solutions (e.g., digital payment apps and mobile wallets), through mobile phones to a larger demographic of unbanked and underserved populations worldwide. The most dramatic impacts of these practical and convenient value propositions in data network externalities have been witnessed within payment inclusion in terms of broader consumer payment access, lower transaction fees, and increased payment processing speed.
However, the increased reliance on data-driven business models in payments can also generate considerable concerns on consumer digital data protection, data security and payment data privacy. With the emerging role of consumer data as quasi assets among digital payment institutions, the incentive to exploit consumer data for various business objectives, sometimes unscrupulously, has become heightened. In addition, digital infrastructures common in the emerging convergence in modern retail payment systems are also disproportionately prone to Techrisks such as cyberwarfare and data breaches. These manifestations can have significant legal implications on consumer protections in payments, including exposures to their personal and sensitive data protection, informational privacy, and potentially, algorithmic discriminations possible in the application of inferential analytics used in payments personalisation. Therefore, there is a pressing need to examine the status and adequacy of existing global payment regulatory and data governance frameworks, identify limitations and develop a further and more radical legal and regulatory framework, capable of aligning the business objectives of new payment institutions with payment data regulatory policy goals on consumer benefits and market conduct.
This research explores the opportunities and challenges to consumer benefits in data-driven innovations within the payments’ ecosystems from the perspective of new technology-oriented payment institutions, referred to as data-driven innovators. The study reveals that while huge benefits are inherent in new data-driven innovations applied in payments, there is a present need to identify and manage the amplified existing risks, and potentially new concerns revolving around consumer data protections and privacy. To these concerns, the study proposes the global adoption of the European Union’s twin peak approach comprising the General Data Protection Regulation and updated Payment Services Directives as the baseline for modern payment regulatory frameworks. Furthermore, a multifaceted data regulatory framework is also proposed to account for potentially new concerns (on inferential payment data) outside the existing scope of the primary EU regulations. The reform proposals include: (1) the introduction of fundamental amendments to existing data frameworks relating to (structural) protection of personal and sensitive data in the context of payment services; and (2) the promotion of increased consumer participation in the regulatory compliance and supervision of payment institutions through a variety of agile “participatory governance” oversight techniques. These techniques should include: 1) the creation of new special data supervisory intermediaries as consent managers for better consumer data protections among payment institutions, and 2) leverage of central bank digital currencies and open banking initiatives in fostering embedded supervision and open data competition within the payment ecosystems.
In making these contributions, the research seeks to provide a comprehensive legal analysis of the emerging blurred data taxonomy and data-driven business models in modern payment systems, where data analytics functions as a double-edged sword. The research findings are significant as it critically examines data protection and payment privacy from the angle of consumer digital interactions with payment institutions in their capacity as data custodians and controllers. This is in clear variance to existing legal analyses which have largely explored consumer data protection and payment privacy majorly from payment mechanisms’ perspectives.published_or_final_versionLawDoctoralDoctor of Philosoph
The place of law : institutional influences on financial sector agglomeration and location choice
No full textCausal relationships between the nature of law and the functioning of financial systems have been theorised or observed since the mid-1990s. No such connection has been drawn with financial centre development, despite survey evidence of how commercial actors value the rule of law, and scholars in non-legal disciplines claiming that it may influence the growth or decay of major centres of finance. This study proposes an explanation in commercial law for clustering behaviour by financial intermediaries, and thus for the development of substantive financial hubs.
"The Place of Law" is concerned with how law affects exchange within professional financial markets. It considers whether institutional incentives guide the location choices of intermediaries and encourage competitors to cluster together. To the extent that Hong Kong, for example, is host to banking or equity market activity more than warranted by its domestic economy or to a markedly different extent than neighbouring Macau, has the law in some way led to this result?
Contracts made in organised financial markets have been shown as having commercial implications extending beyond the parties engaged in the exchange, and while markets are essentially agglomerations of bilateral contracts, they function in a more complex legal manner, not only due to external law and regulation but from entrenched rules of conduct to which participants typically adhere, in part due to concerns as to enforcement and contractual completeness. This study will argue further that clustering assists facilitative social connectivity and reciprocity, and helps foster reputational capital, which are important resources when intermediaries compete for business and execute transactions.
The study contains two innovations, first, using considerations of commercial law and financial practice to address a theoretical gap in the legal origins scholarship; second, characterising financial centres as agglomerations of activity that sustain real qualities and resources. It is able as a result to consider financial centres in relation to the operation of formal and customary law. Succeeding chapters will show relational contract theory as a faithful characterisation of exchange within organised markets, and employ it to connect accepted concepts of the rule of law with market formation and by extension to financial sector agglomeration.published_or_final_versionLawDoctoralDoctor of Philosoph
Long-term growth through structural reform in China : are the social, institutional, and regulatory foundations of the economy sufficient to support a transformation of household consumption?
No full textA stable economy with prospects for long-term, stable growth incorporates sound economic and social policies, supported by adequate regulatory supervision, well-functioning institutions, and a committed government as its foundation. Under this aegis, a developing country may ensure lasting prosperity by delivering increased growth in consumer spending, allowing consumption to become the primary economic driver. An economic model that overly relies on exports and investment will eventually become woefully unbalanced. Consumption based economies are less affected by external trade-related factors such as the economic health of its trading partners and offer some protection from societal and demographic changes as the economy evolves.
The People’s Republic of China began to attract interest in its underdeveloped economy and potential for growth following its gradual economic ‘opening up’ and the launch of reforms during the mid-nineteen eighties. Over time, as China’s economy grew and surpassed its neighbours, China’s steady rise appeared inevitable and its eventual eclipsing of the world’s most developed economies seemed near certain, only some major obstacles remain. For more than three decades, China exhibited extended periods of robust economic growth, attributed in large measure to reforms covering all aspects of its socialist economy, institutions, and regulatory frameworks. This paper examines the current Chinese economic model and the numerous reforms and their implementation to determine their effects, long-term viability and sustainability, as well as whether increasing household consumption, the basis for a strong and independent economy, is possible or will require further reform. Economic reform through liberalization, designed to increase the nation’s wealth and raise per-capita incomes, while also keeping power centralized in the Communist Party has been the principal strategy since the beginning. China’s pursuit of its ultimate goal of long-term development and rapid and stable growth allowed its citizens to experience the benefits from the reform process very quickly. Still its economy is also highly unbalanced, being heavily reliant on exports, investment and credit, instead of a more suitable emphasis on domestic consumption. This is undeniably an unsustainable growth model, and the finite nature of the model is particularly incompatible for China, not only because of sheer size and population, but also due to a host of socio-economic issues, whose effects have yet to be fully confronted. The Chinese government has declared on numerous occasions that it intends to reform and rebalance the economy, with consumption as the primary driver, but the anticipated reforms and consequential changes have yet to emerge.
The consumption patterns that developed in many Western countries such as the United States, where consumption is the main economic driver, are the result of decades of social, regulatory and economic development, which required years to materialize. Increasing consumption is not only a pressing issue for China, but it also has become one of economic and political survival. As an enduring consequence of the global financial crisis, Western nations mired in debt and slower growth were importing fewer goods from Asia. Therefore, export growth in Asian economies is not likely to return to previous levels, which will eventually drastically reduce growth rates in countries dependent on them. Yet, amongst China’s trading partners, imbalances have unexpectedly increased, causing trade frictions and calls for action. In this scenario, the consumer is the only saviour, but without the necessary support, the consumer will be unable to thrive. China furthermore faces numerous challenges besides slower economic growth. Issues related to demographics, debt, social welfare, labour laws, trade unions, and individual legal protections can also be directly linked to household consumption patterns and therefore deserve attention. However, the reforms needed to cure these deficiencies are not all economic, but instead lie in the manner in which governments administer the economy through policy, regulation, and institutional reform. The clues to understanding issues and development patterns and applying reforms that will allow for sustainable long-term growth will not only be found in successful Western and Asian economies, but may also necessitate the dissection of the many sources of the successes and failures in China’s past. Without a stable economic foundation and the social services, government support, and legal protections required to provide citizens a real sense of security about their economic future – discouraging them to save and encouraging them to spend more - there will be even more challenging times ahead.published_or_final_versionLawMasterDoctor of Legal Studie
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