Contemporary Issues in International
Finance 2
-
Crowdfunding
extension research
In previous
blog, I have brief talking about the crowdfunding regulation in America.
However, technology development is existed in all over the world. Except
America, some other countries, such as China, does not have specific regulation
for crowdfunding. Therefore, this blog would compare the crowdfunding between
America and China to study the further development of those emerging country.
Previous
review: crowdfunding is firstly regard
as likely illegal funding and turn to regular after Jumpstart Our Business
Startups Act regulation has been signed in 2012.
Then, in
current China, Crowdfunding has similar threaten as regarding as illegal
funding. From current Chinese Corporation Law, exceeding 200 people nongovernmental
funding would regard as illegal funding. Then, some current crowdfunding
corporation are limited under that regulation which would not develop well. After comparing several differences between
Chinese financial market and American financial market which would be discussed
in the following, the reason of low ebb around crowdfunding in China might be
got.
Firstly, funding
environment is different. Comparing complicated and polybasic funding market in
America, there are few funding methods in China, in particular for micro-corporations
and creation corporations. Therefore, crowdfunding would be possible developed rapidly
in China.
However, as credit
system is different, crowdfunding development would be limited in China. There
is perfect and mature credit regulation, organization to support financial
activities in America. However, this kind of system is typically weak in China.
For investors, the credit of project starters and crowdfunding corporations is
significant. Then, some swindle crowdfunding corporations are frequent exist
recently in China. Therefore, crowdfunding in China could not develop well the
same as America. Even though, there are some licenses are made by Chinese
government to help investors distinguish relatively trusted corporations. As
the weaken credit system, it is difficult for government and central bank
themselves to distinguish some fresh corporations.
Moreover, the
differences in regulation environment would be the significant reason to show
the limitation of crowdfunding in China. In 2012, America set up a Jumpstart
Our Business Startups Act to crowdfunding exemption. However, there isn’t any
specific regulation for crowdfunding in China although Chinese government shows
some support and positive view on crowdfunding future development. Moreover,
current regulations are limiting the development of crowdfunding.
Except
crowdfunding, there are some more technological and financial related area has
been unified and named as internet finance in China (Xie & Zou, 2012). In
China, some experts defined internet finance in 6 patterns, such as Peer-to-Peer
lending, big data finance, crowdfunding, the third part payment, internet
finance website and technological financial organization. The other five
internet finance situation is similar as crowdfunding in China. First of all, according
to the China Development Bank (2013), Chinese government have promoted
financial inclusion system by the “Decision of the CPC Central Committee on
Several Major Issues Concerning the Comprehensive Deepening of Reforms”
announced at the Third Plenary Session of the 18th CPC Central
Committee. To make finance inclusive, internet finance could be used as a popular
and simplified finance model (Xie & Zou, 2012). However, according to the
Economist (2014), some revolute financial system like internet finance could be
hard to survive in some complicated environment, such as China, as its
difficult control. Thus, internet
finance has well finance but currently limited.
All in all, beside crowdfunding, internet
finance would have good prospect in China but regulations should be established
as soon as possible.
Bibliography:
Cdb,. (n.d.). CHINA DEVELOPMENT BANK.
Retrieved 18 March 2014, from http://www.cdb.com.cn/english/NewsInfo.asp?NewsId=4886
The Economist,. (2014). Foe or
frenemy?. Retrieved 18 March 2014, from
http://www.economist.com/news/finance-and-economics/21597966-chinas-giant-banks-are-under-attack-foe-or-frenemy
Thinksaas,. (2014). differences between
America and China in Crowdfunding. Retrieved 18 March 2014, from http://www.thinksaas.cn/news/show/5471/
Xie, P., & Zou, C. (2012). Internet
financial model research. Financial Research.
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