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This paper develops a structural model to evaluate contingent capital notes (CCN) of Basel III under alternative regulatory closure rules. Our dynamic model has a fixed default barrier and at specific discrete time points an additional higher default barrier depending on the closure threshold. The closed-form expressions of CCN and subordinated debts (SD) in the simple Merton model are presented to understand the convex relationship between the price and capital ratio trigger of CCN and to examine the effects of closure rules on CCN and SD through their derivatives’ properties. Our numerical results in the more general model show that a lax closure rule increases the price of SD and distorts the risk information of issuing banks, but not so for CCN. The policy implications are that CCN are more effective than SD in terms of enhancing market discipline because the price/yield information of CCN is more sensitive to the issuing bank’s risk than SD and will not be distorted by regulatory closure rules.

Banking sector openness may directly increase growth by improving the quality of financial services and increasing funds available, or indirectly by improving the efficiency of financial intermediaries, both of which may reduce the cost of financing, in turn, increase capital accumulation and economic growth. The objective of this paper is to empirically reinvestigate these direct and indirect links, using a more advanced econometric technique (generalised method-of-moments [GMM] dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results support the presence of direct and indirect links, thus encouraging countries planning to open their financial markets.

In the new paradigm of Open Banking, which promotes sharing bank clients’ data with other providers of financial services, banks are jostling for a position that keeps them relevant to consumers. In this quest, some banks aim to expand the trust their clients have in them to not only keep their money safe but also their personal data. As trust is a context-specific and ill-defined concept, questions are how banks envision this propagation of trust from one service to another and in which way they will present themselves as trustworthy custodians of personal data. We have conducted an extensive “remote ethnographic” study – including digital co-presence in the sector, four expert panel discussions and twenty-five expert interviews – to explore these questions. Our findings show that the basis for trust in banks to become custodians of people’s data is insufficient, and that a conflation of safe-keeping money with safe-keeping personal data will not remedy that insufficiency. Most importantly, more enforcement of privacy and data protection regulations and independent oversight will be needed, as well as verifiable safeguards and attention for individual differences in privacy sensitivity.

This discussion paper presents some general insights on the Italian technology transfer environment that the author has gained founding ProMarket 11, an Italian innovative startup, five years ago. During that period, ProMarket 11 has contacted several financial service institutions in Italy, all claiming to have internal R\&D centres or being startup friendly or being open innovation organizations, for setting up a pilot project to test the technology. The answers received are worth thinking about. The paper also proposes that no Italian Google (or other Italian multinational internet companies) exists because of the peculariaty of the Italian tech transfer environment. Finally the paper proposes how the Italian tech transfer environment could be radically changed by presenting an opposite view to that by Abravanel.

Funding Information: We thank two anonymous reviewers and associate editor, Prof. Hean Tat Keh, for their constructive feedback and valuable comments, which remarkably improved our study. Data for this study were collected in several research projects over the years. We therefore thank all our research partners who have participated in data collection during these projects, including Dr Katri Kallio, Mikko Riikkinen MSc, and Dr Kaisa Still, in the Redefining Digital Opportunities project (2015?2017) funded by Business Finland, and Professors Maria Holmlund and Tore Strandvik from Hanken School of Economics. Publisher Copyright: © 2022 The Author(s) Digitalization and related transformation in services is disrupting existing businesses and changing the positions and roles of incumbent and new players in the industry, as well as customers. This study aims to create an understanding of how digitalization has driven change in customer value creation, and how companies can enhance customers’ digital value creation in the present situation. For this purpose, we conduct a qualitative inquiry and use inductive logic with rich data from the represented industry – the financial sector – which enables us to detect the evolution of value creation during the last thirty years from an executive perspective. Our contribution is based on defining change processes involved in the evolution of customer value creation due to digitalization and revealing its microfoundations.

For the first time, the Cambridge Centre for Alternative Finance has consolidated its annual regional reports to produce one global benchmarking report, with the intention of presenting world-wide online alternative finance data for 2018.This report presents the key findings from the CCAF annual global survey of online alternative finance. In all, 1,227 unique firms contributed to this study, providing 2,322 firm-level observations globally. Investigating in crowdfunding, P2P/marketplace lending or related capital raising activities, the study shows that 47 per cent of the firms were operating in two or more countries or jurisdictions. Highlights from the report In 2018, the global alternative finance industry facilitated USD $304.5 billion in transaction volume. This global alternative finance volume is representative of funds that were raised via an online alternative finance platform for consumers, business and other fundraisers. This volume represents a 27 per cent annual decline against the $419 billion recorded in 2017. However, this drop in global volume stems primarily from a sharp decline in alternative finance activities in China. Excluding the Chinese market, the global alternative finance market volume actually grew by 48 per cent year-on-year, from the $60 billion in 2017 to $89 billion In 2018. China had the largest alternative finance volume by country, having generated a total of $215.37 billion in 2018. The United States ($61 billion) and the United Kingdom ($10.4 billion) came in second and third respectively. In 2018, five additional countries surpassed the $1 billion threshold of alternative finance market volume including the Netherlands ($1.8 billion), Indonesia ($1.45 billion), Germany ($1.27 billion), Australia ($1.16 billion) and Japan ($1.07 billion). In 2018, online alternative business funding for start-ups and SMEs accounted for $82 billion, which fell by almost half from the high of $153 billion recorded in 2017. Much like the global total market volume, this significant reduction in alternative business funding was largely due to the sharp decline in business focused funding activity in China. Excluding China, global business funding through alternative channels increased from the $21 billion in 2017 to $31 billion in 2018. This represented a 47 per cent annual increase against the previous year. Approximately $162 billion of alternative finance volumes directly stem from funding provided by institutional investors such as banks, pension funds, mutual funds and family offices. With the involvement of institutional investors on the rise, most regions were fairly equally split, with roughly 50 per cent of funding coming from the institutions and rest provided by retail investors.

Licensing regimes form an integral part of Australia’s Twin Peaks system of financial regulation. This article surveys three of the different licensing regimes that were particularly relevant to the Financial Services Royal Commission: the Australian Financial Services Licence (AFSL); the Australian Credit Licence (ACL); and the Registrable Superannuation Entity (RSE). Taking into account the recent changes to regulation of superannuation in the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (Cth), the article analyses the structure and content of these three regimes, and their broader regulatory context, to determine whether there is scope to consolidate, rationalise, and harmonise these licensing regimes. From that survey, the article concludes that there is scope for rationalisation of the AFSL and ACL regimes, but that the RSE licensing regime should continue to be separate.

In the wake of the global financial crisis, many studies have sought to assess the values and culture among professionals in finance. However, prior research is mostly cross-sectional and does not consider the role of self-selection and socialization — individuals with certain values are more likely to choose and remain working in finance and employees internalize the values and culture of their industry. This paper analyzes in a hazard model individual-level panel data from 464 banker in Germany surveyed over 2,000 times between 2000 and 2017. We assess the role of selection and socialization in shaping values in the finance industry. Results indicate that preferences for risk and money are already present before they start to work in finance and are not socialized in the sector. The results indicate a business norm in the financial sector that attracts professionals who think in a riskier and more income-focused manner. Average risk preferences of financial professionals were highest in the immediate years before the global financial crisis in 2007/08. We conclude that changing the culture in the finance industry requires a concerted effort involving recruitment and retention.

We start by considering some of the key reasons behind the academic and industry interest in robo-advisors. We discuss how robo-advice could potentially address some fundamental problems in investors’ decision making as well as in traditional financial advice. We then move on to some of the ongoing issues regarding the future of robo-advice. Firstly, the role Artificial Intelligence (AI) plays, and should play, in robo-advice. Secondly, how far should the personalisation of robo-advice recommendations go. Third, how trust in automated financial advice can be generated and maintained. Fourth, whether robots are perceived as complements or substitutes to human decision-making. Our conclusion outlines some thoughts on what the next generation of robo-advisors might look like. We highlight the importance of recent insights in Explainable AI and how new forms of AI applied to financial services would benefit from importing insights from economics and psychology to design effective human/robot interaction.

We study the impact of trust in traditional finance on the consumer adoption of various fintech products, including cryptocurrencies, peer-to-peer lending, other crowdfunding, roboadvisors, and alternative payment solutions. Using a representative survey of Dutch households, an experiment on Amazon's MTurk and an experiment on an investment website, we nd no consistent evidence that trust in finance affects fintech adoption in any product category. Our results suggest that consumers consider fintech products to be distinct from traditional financial products.

This literature review brings together the main results of gender studies in finance. We first examine possible gender differences in financial preferences and attitudes, as well as stereotypes against women. We then discuss the consequences in terms of saving and portfolio choices, careers in the financial industry and access to leadership positions in banks and central banks. Six main results emerge: (i) surveys suggest small differences, if any, across gender in risk preferences and financial attitudes; (ii) the differences should not be seen as a mere revelation of preferences, but rather as the result of strong impregnation of stereotypes; (iii) these stereotypes are detrimental to women’s investment choices and access to credit; (iv) observed differences are sensitive to socioeconomic context, past experience, and education; (v) women have a persistent limited access to top positions in the financial industry; (vi) there is no strong evidence for a specific female-style of leadership in the financial sector or for supervisory authorities. Overall, our review strongly suggests that even small differences (if any) lead to large gender inequalities, through socialization and self-fulfilling stereotypes.

Blockchain technology has great potential to reshape the financial industry. However, the existing policy and regulatory regimes fail to provide a supportive environment for blockchain technology to fulfill its potential. In this article, I propose technology-enabled co-regulation as a new approach to blockchain implementation, especially in the financial markets. This approach has two distinctive elements: a collaborative environment and a technology-enabled mechanism. A collaborative environment consists of regulatory and industry sandboxes in which regulators and industry representatives can experiment with novel ideas. A technology-enabled mechanism is empowered by regulatory technologies (RegTech) and supervisory technologies (SupTech) that support compliance with regulatory and reporting requirements and facilitate supervisory obligations. This technology-enabled co-regulation can help to achieve policy and regulatory goals: a fair and efficient market, financial stability, consumer and investor protection, law enforcement efficiency, and, most importantly, technology innovation. Technology-enabled co-regulation is preferable to traditional command-and-control regulation and self-regulation. Its collaborative and technological elements are also more advanced than a simple co-regulation is. To reach this conclusion, I conducted an impact assessment of proposed regulatory options. The impact assessment consists of five analytic steps, asking the following questions: What problems have emerged from existing policies and regulations? What are the objectives of the proposed regulations? What are the regulatory options? What are the possible impacts? How do the options compare?

The purpose of this study is to examine the effect of financial inclusion, supported by digital technology development on income inequality, poverty, and banking stability in ASEAN’s emerging countries. This study employs the Generalized Method of Moment (GMM) and Generalized Least Square (GLS) methodology, using annual data for ten years from 2007 to 2016. The empirical results support the argument. First, digital technology development (usage of the mobile phone) can improve financial inclusion because technology makes it easier to access financial services to people who are difficult to reach. Second, financial inclusion decreases income inequality, but it has no significant effect on reducing poverty. This finding indicates that formal financial services seem to be unable to reach the poor. Finally, the empirical results show that the increasing use of banking services through financial inclusion contributes positively to banking stability. Results of this study could encourage the presence of better policies to reform the financial sector by showing that the expansion in the use of financial services has a direct impact on financial/economic distribution. In addition, the paper provides implication for the banking regulator that the usage of banking and formal financial services still dominated by middle- and high-income society. Furthermore, the synergies between promoting financial inclusion and financial stability can also exist if using the right tools.

In this paper, we identify a channel where affiliated banks maintain a positive gap between the implied return (computed from target price) of the corporate client stock and that of the client’s peer. This behavior is triggered after the business deal disclosure when investment banks, including those sanctioned in the Global Research Settlement Act, are most likely to exploit such conflicts. The client’s high institutional ownership and target prices issued in isolation exacerbate the implied return gap. We show that the subsequent sanctions incurred for the violation of Financial Industry Regulatory Authority’s rules effectively discourage the affiliated investment banks to favor their corporate clients via the client-peer channel.

We investigate the application of agile methodology to regulatory compliance projects. Regulatory compliance projects normally apply waterfall approach given the regulatory explicit specified requirements. We identify the major advantages and disadvantages. The findings have implications for practictioners in deciding if agile methodology and approach should be followed for regulatory compliance projects. The article concludes that agile methodology strictly applied contain major unique advantages towards waterfall approach, as fostering autonomous problem solving teams.

This paper discusses the benefits and issues associated with big data and artificial intelligence (AI) for financial inclusion. The benefits of artificial intelligence and big data for financial inclusion are: improved efficiency and risk management for financial services providers; the provision of smart financial products and services to banked adults; simplification of the account opening process for unbanked adults and the creation of credit scores for unbanked adults using alternative information. Several issues associated with artificial intelligence and big data for financial inclusion that need to be addressed include: the shortage of skilled AI workers, increase in the level of unemployment in the financial ecosystem, the unconscious bias in the design of artificial intelligence systems, and other barriers caused by strict data privacy laws.

In the last few decades, the frequency and intensity of extreme weather events have increased in many parts of the world, including Canada, as a result of global warming. Climate warming in Canada is about double the magnitude of global warming; therefore, the effects of weather catastrophes are expected to be higher in Canada compared to other economies. This study explores the impact of weather catastrophes on the Canadian stock market over the period 1988–2016. A mix of accounting ratios and statistical tests is used to estimate the effects of the extreme weather events on the Toronto Stock Exchange (TSX) composite and subsector indices. A significant negative effect of the weather catastrophes on stock market returns and volatility is noticed a day after the extreme weather events. This effect is widespread in all sub-sectors of the market; IT and financial services sectors are the most impacted, while the consumer staples sector is the least. It is concluded that the impact of climate warming in Canada is higher and more widespread compared to other economies.

This study documents the first evidence of the audit committee quality on the best practices of whistleblowing channels in Brazilian companies. We developed a checklist of good practices for internal reporting channels based on the recommendations of the Brazilian Institute of Corporate Governance (IBGC) and the Comptroller General of the Union (CGU). The study sample comprised 397 companies listed on the Brazilian stock exchange (B3). We provide descriptive statistics of the total companies in the sample, approximately 67% of companies implemented whistleblowing channels. We find a positive association between audit committee quality and best practices of internal reporting channels. This finding indicates an effort of audit committees to implement a set of practices to encourage and protect the whistle-blower. We also find a positive association with firm size and audited by big four. Finally, we show that best practices of whistleblowing channels are negative associated with financial industry and the percentage of ownership attributable to the largest shareholder. These findings implies that financial firms like banks and firms with ownership concentration discourage whistle-blowers to come forward and blow the whistle. Our results have policy implications for further strengthening whistleblowing protection in an emerging country like Brazil.

Google, Apple, Facebook and Amazon (the “GAFAs”) have been slow to disrupt the financial services sector, but they are likely to do so in the coming years. The precise nature of the disruption and the appropriate regulatory response is not clear-cut, but the GAFAs’ advantages will stem from their control of the main customer access points, such as mobile operating systems, search engine results pages, app stores, and marketplaces. This paper discusses the GAFAs’ anticipated disruption in the financial services sector in the context of competition law enforcement and the emerging regulatory regimes in the EU and UK that seek to curb the GAFAs' market power. If the new rules are drafted carefully, consumers can benefit from the innovations of the GAFAs and others without suffering the long-run effects of their further accumulation of market power. The new rules should ensure that the GAFAs do not benefit from an asymmetry of regulatory obligations whereby they are not subject to the same rules as their financial services competitors. The GAFAs’ should not be able to leverage their market power from core activities into financial services such that their financial services competitors are hindered in reacting to the GAFAs’ competitive threat.

Ownership of a unique and legal identity is crucial for financial inclusion in Uganda as majority of financial service providers demand a national identity (ID) to satisfy the KYC (Know your customer) requirements. This study attempts to examine the effect of ownership of a national ID on financial inclusion in Uganda. The study utilizes the 2017 World Bank Global Findex data and finds that national ID ownership is statistically significant in predicting the likelihood of being financially included in Uganda. With 95% confidence, national ID ownership, phone ownership, education, income quintile, and employment status significantly predict the likelihood of being financially included in Uganda. The study further reveals that an individual who owns a national ID and owns a phone, has secondary school education, is in the richest 20% income quintile, and is in the workforce is more likely to be financially included compared to the same individual without a national ID although the result is not statistically significant. Generally, the study argues that Uganda can boost financial inclusion by harnessing ID ownership among the financially excluded. The study recommends that national ID ownership policies should be integrated with other policies such as human capital development, income equality, employment, and increasing phone ownership in order to achieve efficient outcomes.

The concept of the emission and circulation of the digital ruble published by the Bank of Russia, suggests the active implementation of the intermediary functions between the end users and the digital ruble platform by credit institutions. In this regard, the risks of an outflow of deposits from the banking sector, strengthening of the regulator’s role in the payment and financial sector, as well as a wide range of technological risks due to the need to build a new ramified payment system based on distributed ledger technology remain relevant. The concept of digital ruble consolidates the significant advantages of its circulation: reducing the costs of making payments and increasing the availability of financial services for individuals and businesses through the use of the offline transactions and smart contracts. To assess the balance of risks and benefits from using the digital ruble, the Bank of Russia plans a phased launch of a pilot project for its digital currency.

COVID-19 clearly dominated many of the pressing issues in the world in 2020 and necessitated changes such as the suspension of wrongful trading provisions to help financially distressed firms and the restriction on share buybacks in the case of the CARES Act in the US for government bail-outs and by the MAS for financial institutions given capital adequacy relief in Singapore. It also brought greater focus back on the real economy as opposed to the over-financialized one that was described in the introduction to this chapter in the previous Annual Review. One positive thing to come out of a pandemic is that it may reduce the inequalities seen in the world since the 1990s, in particular, without the even greater upheaval that has been thought necessary to level society.

Financial Technologies have transformed banking and financial services operations worldwide over the last decade. It has simplified the customer's and banking authorities' lives significantly. The paper reviews briefly the most commonly used financial technologies (Fintech) – Artificial Intelligence, Machine Learning, Blockchain, Big Data and its applications in Banking and Financial services industry (BFSI). Fintech applications such as - Fraud detection and prevention, Portfolio management (Robo-advisors), Loan underwriting, Robotic Process Automation (RPA), Digital Payments, Insuretech and Regtech etc. have been explored in the paper in the context of BFSI. It also studies the impact, opportunities and challenges of financial technologies for BFSI. Further, the paper studies udy the experiences of leading Indian Banks and Financial Services organizations in respect of adoption of financial technologies. The study presents the experiences of Fintech adaptations by three leading Indian Banks – ICICI, HDFC and SBI. The study highlights that the revolution Fintech set in motion has had a profound impact on traditional banking and financial service sectors in terms of operations. Originally used for backend services, it is currently applied in many additional applications such as online payments, mobile payments, fund management, and stock trading. The study concludes that Fintech has changed the financial ecosystem and transformed the basic process of payment methods via the use of digital technology.

Big data is revolutionizing the finance industry and has the potential to significantly shape future research in finance. This special issue contains articles following the 2019 NBER/ RFS conference on big data. In this Introduction to the special issue, we define the “Big Data” phenomenon as a combination of three features: large size, high dimension, and complex structure. Using the articles in the special issue, we discuss how new research builds on these features to push the frontier on fundamental questions across areas in finance – including corporate finance, market microstructure, and asset pricing. Finally, we offer some thoughts for future research directions.

Artificial Intelligence (AI) has created the single biggest technology revolution the world has ever seen. For the finance sector, it provides great opportunities to enhance customer experience, democratize financial services, ensure consumer protection and significantly improve risk management. While it is easier than ever to run state-of-the-art machine learning models, designing and implementing systems that support real-world finance applications have been challenging. In large part because they lack transparency and explainability which are important factors in establishing reliable technology and the research on this topic with a specific focus on applications in credit risk management. In this paper, we implement two advanced post-hoc model agnostic explainability techniques called Local Interpretable Model Agnostic Explanations (LIME) and SHapley Additive exPlanations (SHAP) to machine learning (ML)-based credit scoring models applied to the open-access data set offered by the US-based P2P Lending Platform, Lending Club. Specifically, we use LIME to explain instances locally and SHAP to get both local and global explanations. We discuss the results in detail and present multiple comparison scenarios by using various kernels available for explaining graphs generated using SHAP values. We also discuss the practical challenges associated with the implementation of these state-of-art eXplainabale AI (XAI) methods and document them for future reference. We have made an effort to document every technical aspect of this research, while at the same time providing a general summary of the conclusions.

The risk that a financial institution will experience a loss because it did not accurately determine the fair value of the financial instruments on its balance sheet is known as Valuation Risk (VR). That risk is sometimes heightened because determining fair value is not always a simple or straightforward task. When market data is scarce or unavailable, or markets turn illiquid, banks tend to rely upon internally developed valuation models that use unobservable inputs, which may amplify VR. VR has attracted growing supervisory attention. Several supervisory agencies internationally have voiced concern over banks holding vast amounts of instruments that are potentially exposed to valuation uncertainty and the potential knock-on effects this VR could have on the stability of the financial system. Following up to our previous work discussing VR methodology and practice, this whitepaper seeks to expand the analysis by investigating European banks’ exposure to VR from a more quantitative perspective. To this end, we collected the evidence available from banks’ disclosures, looked for patterns, and drew as many sound conclusions as possible. However, in doing so, we encountered a frustrating reality: inadequacies in available data make it difficult to build an accurate view of these risks. We realized that the lack of data itself is an important lesson, as it informs us that crucial information is missing in banks’ disclosure. This paper delivers the results of the narrower analysis allowed by the limited data and delves into the implication of these constraints. The lack of data thwarts efforts to build an accurate view of the risks truly resting on financial institutions’ balance sheets. This is a serious matter. European banks hold amounts of assets and liabilities potentially exposed to VR that exceed their regulatory capital by many multiples. Even a relatively small unexpected shock or estimation error in instrument valuations could significantly impact banks’ capitalization and resilience. In the debate over VR, we believe a joint action by supervisors and standard setters to deepen banks’ disclosure of their holdings of assets and liabilities potentially more exposed to VR would significantly increase transparency and risk-awareness in the financial industry. By increasing clarity and transparency around bank risks through increased disclosure, banks can enhance public trust and allow observers and analysts to better assess bank balance sheets, leading to share prices that more closely reflect bank risks.

Individuals and corporations borrow and lend to each other. China has developed with most financial intermediaries. Still, there is a systemic risk involved in managing this business. This risk begins by checking that the borrower's data is not relevant. However, fintech P2P lending has gained significant interest in Indonesia as its laws and regulations are not yet in force. P2P lending is also being seen as a new market to prosper. It also requires analysis of issues related to the application of P2P loans. This research addresses the problems of P2P loans and offers technical and non-technical solutions. These findings provide a comprehensive description, a needs assessment dining room and alternative solutions through Kitchenham's Systemic Literature Review (SLR) strategy across the ACM, AIS, Microformats, ScienceDirect and ResearchGate databases.

The impact of the COVID-19 Pandemic has affected the whole of human life, including the world capital market and all its problems. COVID-19 has influenced trading patterns in the capital market, both in terms of trade rules that are superstructure and capital market infrastructure itself. Indonesia's economic turmoil is not only caused by the pandemic COVID-19, but also by several financial scandals such as the Jiwasraya, Asabari and several moral hazards by stock market brokers. The moment of capital outrage at the moment is like a honeymoon in stock trading that occurs during an extreme event. Some events that have caused the world capital market to fall deeply, are the Black Tuesday 1988, the monetary crisis in Indonesia and Asia in 1998, the global financial crisis in 2008, and most recently the pandemic COVID-19 phenomenon that began in 2020. The extent to which Buffettology's role in investment decision making by Investment managers in the Indonesian capital market is the aim of the author's research. The main finding of this study is the prospectus of vigilant leader company as a determinant in making investment decisions both in normal situations and in the midst of a pandemic. This research will be very essential for investment and financial decision makers and for the Financial Services Authority (OJK) in Indonesia. This is because the wrong decisions of investment managers, as well as the company's performance with a stock price characterized by Roller Coaster (called saham gorengan) is a special concern for OJK to take decisive action for the sustainability of a healthy and conducive Indonesia Capital Market for investors.

Consumers seek restitution for disputed financial services by filing complaints with the Consumer Financial Protection Bureau (CFPB). We find that filings from low-socioeconomic (i.e., low-income and African American) zip codes were 30% less likely to be resolved with the consumer receiving financial restitution. At the same time, low- and high-socioeconomic zip codes submitted an equal share of the CFPB complaints. The socioeconomic gap in financial restitution was scarcely present under the Obama administration, but grew substantially under the Trump administration. We attribute the change in financial restitution under different political regimes to companies anticipating a more industry-friendly CFPB, as well as to the more industry-friendly leadership of the CFPB achieving less financial restitution for low-socioeconomic filers. The financial restitution gap cannot be explained by differences in product usage nor the quality of complaints, which we measure using textual analysis.

German Abstract: Die Distributed Ledger- bzw. Blockchain-Technologie fuhrt zu einer zunehmenden Dezentralisierung von Finanzdienstleistungen („Decentralised Finance“), die weitgehend ohne die Einschaltung von Finanzintermediaren angeboten werden konnen. Dazu tragt wesentlich die sog. „Tokenisierung“ von Vermogensgegenstanden, Zahlungsmitteln und Rechten bei, die verschlusselt als „Kryptowerte“ in verteilten Transaktionsregistern digital abgebildet werden konnen. Der vorliegende Beitrag erlautert die Grundlagen und Anwendungsfelder dezentraler Finanzdienstleistungen mit Kryptowerten, die mittelfristig die gesamte Architektur des Finanzsektors verandern konnten. Dieser Trend betrifft langst nicht nur die kontrovers diskutierten Zahlungsverkehrssysteme mit Kryptowahrungen wie dem Bitcoin, sondern Handelsplattformen, Kapitalmarkte oder Unternehmensfinanzierungen. Es bildet sich ein rasch wachsendes Okosystem aus Startups, Technologieunternehmen und etablierten Finanzdienstleistern, fur das jedoch noch ein verlasslicher regulatorischer Rahmen fehlt. Die derzeit auf europaischer Ebene diskutierte Initiative „MiCA (Markets in Crypto Assets)“ geht in die richtige Richtung, sollte aber im Interesse der Wettbewerbsfahigkeit des europaischen Finanzsektors zeitnah umgesetzt werden. English Abstract: Advances in distributed ledger technology are leading to a growing decentralisation of financial services (“decentralised finance”) that can be offered largely without intermediation by financial institutions. An important driver for this development is the ongoing tokenisation of assets, payments and rights, which enables the digital encryption of “crypto assets” on distributed ledgers. This article elaborates the foundations and fields of application of decentralised financial services with crypto assets that could challenge the established business models of financial institutions. This trend not only affects payment systems based on controversial crypto currencies such as Bitcoin, but also exchange platforms, capital markets solutions and corporate financing. A rapidly growing ecosystem of start-ups, tech companies and financial institutions is emerging, yet this ecosystem lacks a consistent regulatory framework. The European initiative MiCA (Markets in Crypto Assets) points in the right direction but needs to be adopted soon to ensure the future competitiveness of the European financial sector.

Financial services, particularly payments, have significantly transformed over the years due to rapid changes in technology. ASEAN has witnessed changing consumer behaviour towards e-commerce and e-payments. With an upsurge of e-wallet providers in the Asia Pacific region, digital payments using mobile money has witnessed a surge in ASEAN. Does the digital payment usage in ASEAN reflect equally for all sections of the population, particularly along gender divides? We investigate this question using the 2017 Global Findex Database survey data. Key findings from our empirical results show that a) women are more likely than men to use traditional payment methods like cash, b) the gender gap persists in more digital payment modes like mobile money, c) age exacerbates the gender divide in the usage of financial institutions for payments, and d) the gender divide in mobile money usage is larger for more developed ASEAN countries like Singapore and Malaysia.

‘Open Banking’ is a digital finance innovation built upon customer data sharing between incumbent financial institutions and third party financial service providers. Open Banking is reshaping the banking sector through extending the reach and convenience of traditional banking services by opening up and leveraging consumer data. This disruption is both challenging and changing the nature of established banks and banking. This article provides a brief global survey of Open Banking regulatory developments as context for Australia’s new Consumer Data Right (CDR) regime. Spearheaded by the Open Banking movement, the CDR is the first step Australian policymakers have taken towards realizing the potential of open data capitalism. Australia is a jurisdiction, like the EU, that is increasing taking data protection and control seriously. We argue that emerging Australian Open Banking arrangements are both a measured response to digital financial developments, and another front in Australia’s ongoing commitment to uphold online consumer protection and empowerment.

The paper aims to explain the use of Peer to Peer Lending-based fintech as a platform in creating economic productivity in Rural Areas in Indonesia. Peer to Peer Lending to suppress economic and social inequalities for people who are far from urban access. As for the background of this writing because Indonesia is one of the countries considered to have the potential to increase economic growth through digital financial inclusion in the Southeast Asia Region, although based on the facts some Indonesian people are still not netted in banking and investment accounts that are largely experienced by rural communities. Peer to Peer Lending is considered potential because it can reach unlimited digital-based financial services. First geographically, the vast area of Indonesia is mostly in rural areas has affect to the lack of financial access for rural communities and low levels of economic productivity. Secondly lack of formal education in rural environment can overcome by Peer to Peer Lending through cutting bureaucracy and tight requirement in conventional banking by using integrated digital and technology of finance. Third, this paper will show that fintech Peer to Peer Lending as the one of sustainable finance rather than the platform has been exists by Indonesia Government for rural areas. In this section, the platform of Peer to Peer Lending can be used to sustainable finance and economy during the recovery pandemics Covid-19, whereas it refers to the concept less physical contact economy. Furthermore the paper has conducting obstacle to implementing Peer to Peer Lending for rural communities include: lack of formal education, infrastructure and public transportation. Therefore the author has draft the framework to overcome the issues that involved strong stakeholder include: national government, bank and financial sector, academic and research institution, non-profit and fintech group. First; strengthening financial and digital literacy for rural communities through empowerment program, the empowerment will focus on practically to using Peer to Peer Lending platform between lenders and borrowers. In this section the empowerment program must emphasize management risk for rural community to using this platform such us identifying the asset of borrowers. The borrowers must have ability identifying and arrange their financial history and asset as building Secondly: the paper will emphasize the structural and system for the readiness of Peer to Peer Lending platform for rural community. This paper will also examine whether the financial of technology based on peer to peer lending is effective for rural communities in Indonesia by conducting and analyzing data; smartphone user, population growth and unbankable MSME’s. The results of the data will used to prove that this platform can reduce social and inequality for rural communities in Indonesia.

This chapter for a forthcoming volume on artificial intelligence and international economic law surveys regulatory interventions through which governments seek to enhance domestic companies’ access to data: Mandatory data sharing requirements (as under the EU’s new financial services regulations), data transfer restrictions (as under India’s draft ecommerce policy), and open data initiatives (as under Singapore’s ‘smart nation’ initiative)— all seek to make more data available with the aim of spurring innovation and growth in the artificial intelligence economy. Such measures are indirectly affected by existing and newly emerging rules of international economic law. International investment law is likely to be mobilized in defense against governments that seek to mandate data sharing from private data holders, while new rules on “digital trade” are meant to ensure transnational data mobility. In sum, international economic law regulates data in favor of data-holders’ ability to retain control over data location and use and constrains states’ ability to confront asymmetric control over data.

The modern financial system is plagued by misaligned incentives that allow some firms to extract distributive profits, and direct wealth transfers in their favor, without producing anything of value, or improving society with enhanced employment or socially useful innovation. Many modern financial products and activities serve no underlying economic or productive purpose. The system is creating market intermediaries of astounding size, power, profitability, and economic and regulatory policy influence. Some financial firms expressly profit from heightened interconnection and complexity, while others benefit directly from increased volatility. Yet we all bear the costs of this evolved financial system when it unravels due to its interconnectedness with the real economy, and our increased reliance on markets. This article advocates for a financial system that is de-financialized, de-complexified, more transparent, and better orientated to productive ends in a way that benefits all of society, not just the firms who reap asymmetrical payoffs in a complex system, intermediate capital, create financial products, or run the plumbing in a system that ultimately serves them best. This article gives support to Hyman Minsky’s “money manager capitalism” hypothesis by showing how the financial system has evolved since the 2008 crisis because of misaligned incentives. In support of this contention the article profiles numerous post-crisis trends and events in financial markets where misaligned incentives emerge, including moral hazard in debt origination, how some financial firms benefit from volatility; the real winners of the Game Stop “meme stock” saga; problems from price dislocations in credit exchange traded funds (ETFs) during the coronavirus pandemic crash; conflicts in the construction and composition of indices; market disruption from volatility-linked exchange traded products (ETPs); misaligned incentives in special purpose acquisition companies (SPACs) and evolved private equity (PE) business models; fragilities in pension administration; environmental, social, governance (ESG) opacity and greenwashing in investment funds; and governance conflicts from economic and proxy voting power of mega-asset managers.

The prime minister established a Taskforce on Innovation, Growth and Regulatory Reform (‘TIGRR’) in February 2021. Led by MPs Sir Iain Duncan Smith, Theresa Villiers and George Freeman, its remit was to ‘to scope out and propose options for how the UK can take advantage of our newfound regulatory freedoms to deliver these aims, as well as challenging the Government’s own emerging proposals’. The TIGGR received submissions from, or met, with more than 150 organisations and individuals. The IEA is publishing three of those contributions in this collection: the IEA’s own submission, drafted by Victoria Hewson, Head of Regulatory Affairs, and those of Sir Mark Boleat and Jon Moynihan OBE, two distinguished commentators who gave their personal view. The TIGGR published its report and recommendations on 16 June 2021. Its findings are wide-ranging and ambitious, and reflect some of the recommendations made by our authors. We are publishing this collection to inform the discussion about the TIGRR report and regulatory reform in general. The report and the three submissions illustrate the scale of the challenge to achieve the prime minister’s objectives of driving innovation, reducing barriers to entry and improving the regulatory environment for small businesses. They also show that there are myriad opportunities to make progress towards them. Sir Mark reflects on the structural reasons for the present regulatory burden, the need to address regulator accountability and the tendency of incumbent business, far from seeking deregulation, to favour ever greater regulation as a barrier to entry for potential competitors. Jon Moynihan reflects on the differences between common and civil law traditions, and the UK’s regulatory culture and incentives. He puts forward some key areas such as health care and financial services, where reforms could transform innovation and competitiveness. Victoria Hewson puts forward three examples of current regulations that could be reformed, one concerning industrial goods, one concerning digital services and one concerning employment law, and considered the benefits and trade offs that might result.

This paper shows how strategic planning may function as a conflict-mediating routine. We conducted a five-year case study in a large financial services joint venture firm co-owned by a Latin American state bank and a European multinational financial company. The controlling companies have different business objectives for the JV: the former prioritizes short-term financial results, while the latter prioritizes long-term consolidation of the business. We present the case in the form of a narrative of findings, which shows how we pursue and uncover different levels of organizational reality and, more specifically, the different roles played by strategic planning. The paper makes two contributions: first, to studies of routines as praxis capable of supporting the solution of conflicts that arise from the presence of different business logics; and second, to business practice, as it provides guidance on considering additional roles taken by strategic planning.

EU securities regulation has established a taxonomy of environmentally sustainable activities. This article discusses, from a law and economics standpoint, the potential of this taxonomy to support a sustainable corporate governance. Corporate governance can be an efficient way to channel investor preferences towards sustainability because the concentration of institutional shareholding has lowered the transaction costs of shareholder action. However, there is a principal-agent problem between institutional investors and their beneficiaries, which depends on greenwashing and undermines a sustainable corporate governance. This article argues that introducing environmental sustainability into EU mandatory disclosure aligns the institutional investors’ incentives with the interest of their beneficiaries and may foster the efficient inclusion of sustainability in corporate governance. The argument is threefold. Firstly, the EU Taxonomy may curb greenwashing by standardizing the disclosure of environmental sustainability. Secondly, this information may become salient for the beneficiaries as the same standards define the sustainability preferences to be considered in recommending and marketing financial products. Thirdly, sustainability disclosure prompts institutional investors to compete for sustainability-minded beneficiaries. Being unable to avoid unsustainable companies altogether, institutional investors are expected to cater to beneficiaries’ preferences for environmental sustainability using voice instead of exit.

The results of the research and facts listed in this work show how the entrepreneurship training workshop Empretec may benefit the performance of micro, small and medium sized enterprises in Brazil. Our work draws attention to the interaction between promoting entrepreneurship and activities of the financial industry, especially private equity funds and venture capital investors. Unlike other studies that focus on confirming that participation in entrepreneurship programs improves business performance and entrepreneurial activity, this work points out the reasons how and why Empretec contributes to bolster entrepreneurial mind-set and accomplishments and welfare in a society. The findings suggest that Empretec is particularly effective in strengthening awareness on behaviours, emphasizing the relevance of habits, and taking advantage of the effectiveness of active learning techniques. Such evidence arises from the analysis with qualitative and quantitative tools the data from a broad nationwide survey, together with statements from participants in Empretec workshops in Brazil since 1993. Amid systematic planning and monitoring, one detected challenge to improve is record-keeping. Entrepreneurs may then access accurate, timely, and relevant information on the current situation and on external factors affecting their business, which will eventually improve their strategic and operational decision-making and, hence, enhance business performance.

We show that the collapse of the municipal bond insurance industry plays an important, but previously overlooked, role in driving regional variation in U.S. drinking water pollution. Public water infrastructure has traditionally been financed using municipal debt partly backed by a small number of monoline insurers. Starting in the 1990’s, some--but not all--of these insurers began insuring structured financial products unrelated to water infrastructure. We show that after these products crashed in value in 2007, municipalities that were more reliant on relationships with adversely affected insurers faced higher borrowing costs. These municipalities then reduced their borrowing and scaled back investments in water infrastructure, leading to increased water pollution. The data suggest that market failures in the municipal bond insurance industry explain 32% of the relative rise in U.S. drinking water pollution since 2007.

BigFintechs (BFTs) have become new giants of global finance bringing with them key new challenges, particularly for emerging and developing economies. The purpose of this Technical Paper is to garner a more robust understanding of the emerging impacts (positive and negative) of BFTs across the full spectrum of the Sustainable Development Goals (SDGs), to better inform the dialogue around a new generation of governance innovations to address such impacts, particularly with regard to least developed countries (LDCs). The current focus of research and practical approaches to Fintech regulation, governance and supervision are viewed as the domain of the financial sector and, to a limited degree, the technology sector. These approaches relate to the implications of harnessing emerging technology in delivering financial services, with a global focus on issues of privacy, financial security, money laundering, taxonomy, benchmarks and overall financial integrity and stability. However, BFTs are playing an increasing role in shaping (in both positive and negative ways) a sustainable future, including issues that have previously been considered as outside the realm of examination. To date, there has been no holistic examination of all the activities in which BFTs are involved. Therefore, the understanding of their cross-cutting impacts across the SDGs, policy, regulatory and corporate governance is equally limited. The current narrative of the 'Fourth Industrial Revolution' and the digital economy in terms of ensuring the transformative nature of digital technologies are harnessed for sustainable economic development and that developing countries and especially LDCs are not left further behind. The narrative is premised on the notion that Fintech has an enabling capacity and that there are certain risks largely related to data governance, consumer protection and operational risk management that must be addressed. Furthermore, BFTs are examined largely within subsets of activities related to their financial service offerings rather than across their evolving ecosystem of activities and the implications of these across the full spectrum of the SDGs and for LDCs. This paper begins with the premise that the nature and scale of BFT activities carries different emerging trends, risks and vulnerabilities in LDCs. This paper broadens the examination in three key aspects: (i) it covers a fuller spectrum of BFT activities, brought into the scope of this paper through their connection to the Fintech element employed; (ii) it engages an impact lens developed to capture a fuller range of the environmental, social and economic SDGs; and (iii) the paper presents a case study and landscape analysis with a view to advancing the collective understanding of emerging trends and their impacts, particularly on LDCs.

Credit banks in the United States provide specialized financial services to low-income communities through community lending projects. These projects provide "financing for economic development projects for targeted beneficiaries, and, for... purchasing or funding small business loans, ... or community development loans,” including low-credit mortgages and low-interest term loans. Generally grouped as "financial inclusion" initiatives, these services represent a renewed endeavor amongst banks to strengthen Environmental, Social, and Governance (ESG) factors. This paper will examine the extent to which banks have been genuine community lenders, drawing on shareholder letters and annual reports from Citibank and Wells Fargo to qualitatively determine the institutions’ messages. From there, I will examine the balance sheets to account for the distribution of liabilities, particularly the extent to which ESG programs contribute to losses for banks. To further substantiate the extent of some of these practices, including fraudulent accounts and excessive overdraft fees from 2010-2018, the paper will draw on direct reports from the US Federal Government, including statements from the Department of Justice indicting Citibank & Wells Fargo for alleged illegal misreporting of profits and accounts. I will research data from academic papers published by the University of Michigan, the National Bureau of Economic Research, and the Annals of Regional Science. Ultimately, I will try to prove with these sources the extent of the risk community lending posed on corporate profits and whether the tradeoff can be ultimately profitable for the banks.

As a result of the exponential growth of information being generated, stored, and analyzed, there is a great need for a dedicated Information Governance program in organizations. This paper presents the proposal of implementing an Information Governance program in the Banking Sector. An introduction to Information Governance along with its applications, challenges, and implementation strategy in the financial services and banking industry is discussed. A comprehensive literature review is presented that discusses the information governance program implementation best practices in the banking and financial sector. Strategies are presented to track the key metrics, management of data including data de-duplication, cleansing, conversion of data from legacy format to digital form, the applicability of relevant data across lines of businesses and stakeholders, and ensuring compliance and regulatory mandates. Further, strategies are proposed to leverage the marketing power of social media, email, and cloud computing technologies. The paper presents key metrics that are required to track the organizational performance and risks that highlight the key performance and key risk indicators of the firm that aids in aligning the organizational, and information systems strategy to the firm’s business strategy. The banking and financial sector are highly regulations and compliance-driven which makes it quintessential for the Information Governance strategy to incorporate the required expectations in the implementation strategy. Thus, this paper presents the regulatory, and compliance legal acts and their implementation strategy in the banking sector. Finally, a conclusion is presented that summarizes the key points of Information Governance strategy implementation, best practices, along with compliance and regulatory expectations, and relevant policies to drive the firm’s initiative of implementing an Information Governance program.

While the U.S. economic position today is unlike any period in modern U.S. history, understanding the cyclical nature of financial regulation and economic behavior patterns delivers valuable insights for mitigating risk in the current environment. Spanish philosopher George Santayana is credited for the aphorism, "those who cannot remember the past are condemned to repeat it," but analyzing the last 100 years reveals patterns during periods of recession and recovery identified in this paper as the cycle of financial stability and the funnel of economic emergency. Historical patterns, economic data, and evaluation of current U.S. regulation indicate the looming threat of financial failure following the COVID-19 pandemic, making the crisis of 2020 a recession triggering event that ultimately leads to greater economic disaster. The U.S. has experienced economic crisis several times throughout history, but today's unique challenges require a different financial regulation approach. The absence of technology policies, lack of data privacy regulation, deregulated areas of the financial industry, and the nebulous industry/agency relationship create hurdles for ensuring financial stability. Without correcting financial regulation, introducing digital assets and technology conglomerates to the financial sector will result in unknown global pressure exacerbated by legislative deficiencies, drastically increasing systemic financial risk. Leveraging results from comprehensive analysis, the U.S. can prevent impending financial failure through effective financial regulation and ensure stability as the nation recovers from a deep recession and national debt crisis due to consecutive, compounding economic disasters.

Digital financial services (DFS) have rapidly expanded in recent years, largely driven by fintech and further accelerated by the COVID-19 pandemic. There are growing concerns that traditional financial literacy is insufficient to empower individuals to effectively access and use DFS. Digital financial literacy (DFL) is emerging as a key enabler that involves a set of knowledge, awareness, and abilities, which includes some aspects of financial literacy (FL) and digital literacy (DL), but also specific features and risks that are particular to DFS. This chapter focuses on construction of a multidimensional framework for DFL that highlights the empirical techniques needed to test the reliability, validity, and robustness of the metrics. We also examine best practices to investigate the extent to which DFL can boost financial inclusion and improve peoples’ livelihoods, especially for those traditionally excluded from the financial marketplace. The insights from this chapter provide a useful starting place for scholars to build upon to contribute to better-targeted DFL strategies that ensure no one is left behind in the digital transition.

This study aims to document the inter-linkages between two on-going global trends through an empirical investigation – (1) the rapid advancement of the ICT-driven innovations in delivering various types of financial service, and (2) the growing legal and regulatory efforts to protect consumers in the financial markets, after the recent financial crisis in particular. To that end, we compile a set of macro-level indicators on the aggregate outcomes of the financial service sector in Korea during the last three decades, and conduct a regression analysis to gauge the effects of the digital transformation (DT) in the country on those indicators. Using an ARDL-ECM as our empirical model, our results show that: Over time, the unit cost for financial intermediation in the country tends to move in tandem with the growth of economic output, although the profit portion of the cost did not exhibit a long-term relationship with the GDP trend; The long-term effect of the DT trend is negative (i.e., costsaving) for labor input and capital expenditure, which are shown to be statistically significant, and, as a consequence, its impact on the total intermediation cost is also positive and statistically significant. Based on the above outcomes, we elaborate their implications in designing a set of policy instruments to protect financial consumers, and also discuss the Vietnamese case as an illustration to extend this type of macro-level analysis for the purpose of coming up with a policy regime for financial consumers in an emerging-market context.

This paper shows that low-risk stocks significantly outperform high-risk stocks in the local China A-share market. The main driver of this low-risk anomaly is volatility, and not beta. A Fama–French style VOL factor is not explained by the Fama–French–Carhart factors, and has the strongest stand-alone performance among all these factors. Our findings are robust across sectors and over time, and consistent with previous empirical evidence for the US and international markets. Moreover, the VOL premium exhibits excellent investability characteristics, as it involves a low turnover and remains strong when applied to only the largest and most liquid stocks. Our results imply that the volatility effect is a highly pervasive phenomenon, and that explanations should be able to account for its presence in highly institutionalized markets, such as the US, but also in the Chinese market where private investors dominate trading.

This paper - part of a series from the UN Taskforce on Global Digital Finance Governance - examines existing regulatory frameworks relating to digital finance platforms - "BigFintechs" (BFTs) - and their positive and negative impacts on the United Nations Sustainable Development Goals (the SDGs), with a particular focus on regulatory initiatives in relation to or originating from developing countries. The paper begins by highlighting the significant potential of BFTs in contributing to the SDGs through financial inclusion and provision of financial services. However, BFTs also create unique risks to the financial system as a result of platform economics and tendencies toward market concentration and dominance, misuse of data and gaps in existing regulatory standards. In response to these risks and opportunities, domestic and international policymakers have developed a range of regulatory approaches to digital technology, finance and sustainable development. Most of these regulatory processes and approaches are not specifically focused on BFTs or the SDGs; they also do not specifically address issues from a developing country perspective. Further, while regulators and policymakers are now focusing on digitization and sustainability-related risks, so far there appears to be little synergy between the governance of BFTs and the pursuit of the SDGs. To better understand the scope and limitations of existing regulatory approaches, this paper considers two aspects. First, the paper examines regulations relating to economic activities, structures and impact of BFTs, with a focus on financial, data, competition and Internet/telecoms regulations. The existing regulatory processes address some of the challenges brought by BFTs, including risks to financial stability (i.e. systemic risk considerations), market dominance and concentration, data protection and Internet/telecommunications licensing. At the same time, existing regulatory responses to BFTs are not consistent across jurisdictions, leading to problems with extraterritoriality of domestic laws and regulatory fragmentation. Further, regulators often have limited technical expertise and experience in dealing with BFTs and are grappling with providing effective answers to risks generated by BFTs. Second, the paper examines regulatory initiatives relating to the SDGs. To date, most sustainability-related initiatives have been developed in the context of environmental, social and governance frameworks (ESG) rather than the SDGs. Our review concludes that an array of domestic and international policies has emerged to address sustainability-related risks, rather than to support sustainable development in a holistic manner. The proliferation of such different standards, however, creates regulatory uncertainty and a lack of clear standards for ESG/SDG governance. While several jurisdictions such as the EU have attempted to standardize ESG/SDG governance, there is still no coherent approach to ESG/SDG reporting and supervision. In addition, the majority of existing ESG/SDG governance standards are voluntary or insensitive to the impact of technology. Based on the analysis of the BFT and SDG processes and regulatory approaches, we highlight the gaps that need to be addressed by relevant stakeholders. First, regulators should promote greater consistency among international and national regulatory standards. This point is particularly relevant in the context of developing countries that may struggle to comply with varying international standards and approaches. Second, considering the broad scope of BFT business models, regulatory bodies should promote greater synergy and cooperation in their work. Third, regulators in developed countries should pay greater attention to the interests and needs of developing countries to support their pursuit of sustainable development. Fourth, regulators should adopt balanced and proportional regulatory approaches for fintech companies and services to address new risks created by BFTs. Specific ways to address such gaps are discussed in Technical Papers 3.2 and 3.3.

Human resources are one of the important factors in a company to achieve its goals and objectives, because human resources are one of the factors determining the success or failure of a company in achieving its goals. Human resource development is basically an increase in employee performance that reflects the ability of organizational members to work, meaning that the performance of each employee is assessed and measured according to the criteria set by the organization Organizations are systems and human activities that work together. In line with that the organization is said to be a rational coordination of the activities of a number of people to achieve goals. Therefore, the organization expects that employees can excel and be able to create conditional conditions. So that employees will not experience boredom, boredom and feeling lazy to work which results in decreased morale. If morale decreases, it can result in a decrease in employee performance. Decreased employee performance can result in losses in the organization. Improved employee performance will bring progress for the company to be able to survive in an unstable business environment competition. Therefore, efforts to improve employee performance are the most serious management challenges because the success in achieving the goals and survival of the company depends on the quality of the performance of human resources in it. Tokopedia is an online marketplace that allows individuals and business owners in Indonesia to open and manage their online store easily and free of cost, while providing a safe and comfortable online buying and selling experience. Tokopedia is one of the largest and fastest growing internet companies in Indonesia with a vision of “Building a better Indonesia through the internet”. This online buying and selling (start-up) has an office based in Jakarta and a website registered with the name Tokopedia.com. This encyclopedia of online shops in Indonesia takes the form of an online mall that brings together sellers and buyers and allows for safer and more convenient online buying and selling transactions. Tokopedia provides a means of buying and selling online, where anyone can open an online store and serve buyers from all over Indonesia. Tokopedia users, commonly called Toppers, can sell new and used goods through Tokopedia, even though the majority of items sold are new and at a predetermined price. Tokopedia was founded by William Tanuwijaya and Leontinus Alpha Edison on February 6, 2009 and its product, the www.Tokopedia.com website, was officially launched on August 17, 2009. Tokopedia received initial funding of Rp. 2.5 billion from PT. Indonusa Dwitama (a subsidiary of the Nusapati Group) which is an investment company in the field of boksite mining, oil palm cultivation, online shops, trading in the oil and energy sector as well as financial services in February 2009. While it is still in the "closed" version where users are only by invitation, Tokopedia won BubuAwards 2009 with the “Corporate Awards E-commerce Category”. Tokopedia received further investment funds from East Ventures, a Singapore-based company that focuses on investing in the growing internet business. Tokopedia was selected as Marketeers of the Year for the e-commerce sector at the Markplus Conference held by Markplus Inc in 2014. This award was obtained because Tokopedia has contributed to developing online businesses in Indonesia. Being a bridge that connects millions of people who want to create opportunities, Tokopedia was awarded the Best Company in Customer Industry at the 2016 Indonesia Digital Economy Award. Entering the 7th year of establishing Tokopedia, William Tanuwijaya as CEO and Co-Founder of Tokopedia was chosen to represent Indonesia as the Young Global Leader at the World Economic Forum. Back then, our CEO was seen as one of the most influential young leaders in Asia-Pacific for having created promising innovations for the younger generation. Tokopedia has a Marketplace that provides the most diverse selection of products in Indonesia. Tokopedia has collaborated with more than 10 million sellers, various official stores and logistics and payment partners to provide the best experience for its customers.

This paper explores the potential outcomes of using peer-to-peer lenders in financing economic activity. Combining a random regression forest, a machine-learning process, with an agent-based model, we perform simulations on artificial economies with various degrees of adoption of peer-to-peer lending. We find that as peer-to-peer lenders proliferate, there is increased financial instability, lower GDP and higher unemployment. On the other hand, peer-to-peer lending increases the total volume of loans given out, but demonstrates a preference towards consumer loans (over corporate loans), which has a negative effect in the long run. Finally, introducing peer-to-peer lenders increases the access of the “unbankable” population to services which conventional banking is not able to offer within the extant regulatory framework. Our results can help policymakers as they address the issue of regulation in the peer-to-peer finance industry.