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1 – 10 of 17With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact…
Abstract
Purpose
With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks.
Design/methodology/approach
Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks.
Findings
Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined.
Originality/value
This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.
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Antonella Francesca Cicchiello, Maria Cristina Pietronudo, Daniele Leone and Andrea Caporuscio
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries…
Abstract
Purpose
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries regulate equity crowdfunding market in order to incentive the investments and protect investors.
Design/methodology/approach
Based on a legal acts' analysis, we conduct a qualitative study comparing the crowdfunding regulation addressed to investors. In particular, we focus our analysis on the European countries with the highest concentration of crowdfunding platforms (i.e. the UK, Germany, France, Italy and Spain).
Findings
The results show that some countries, such as the UK, Germany and France, present an investor-oriented approach based on non-restrictive regulation, while other countries, such as Spain and Italy, have a restrictive approach that protects investors excessively and discourages them. In particular, the case study of France shows how the introduction of unrestricted regulation can produce positive effects on the volume of crowdfunding transactions.
Practical implications
The paper is addressed to investors, policymakers and intermediaries (platforms) to help the first in orienting themselves between the different crowdfunding regulations and the latter in aligning and orchestrating rules and norms.
Originality/value
This is the first study that analyses the role of investor-oriented regulations in the promotion of entrepreneurship through the identification of four key factors to monitor equity crowdfunding regulations.
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This paper aims to conceptualize and empirically illustrate the challenges that financial market regulation presents to politicians and the organization tasked with specifying…
Abstract
Purpose
This paper aims to conceptualize and empirically illustrate the challenges that financial market regulation presents to politicians and the organization tasked with specifying regulations and supervising their implementation in the interest of users and consumers of financial instruments. It analyses the problem from the viewpoint of the governor's dilemma and the control/competence conflict, the linked problem of the rent-seeking of agents/intermediators and consumers of financial instruments. Political accountability problems are enhanced by the materiality of the technologies used, i.e. algo trading.
Design/methodology/approach
The paper theoretically conceptualizes and empirically illustrates the argument.
Findings
The paper finds that regulators of digitalized financial markets are faced with considerable problems and depend on private agents when regulating financial transactions. However, the new technological instruments also offer new possibilities for securing compliance.
Research limitations/implications
Further research should focus more in-depth on the cooperation between public and private actors in the specification and implementation of regulatory details. It should further investigate the conditions which allow regulators to use RegTech in the surveillance of financial firms.
Practical implications
Since financial market transactions are opaque for most users, the creation of more transparency is crucial to hold regulators accountable in their activity of surveillance of financial firms. New algorithm-based technologies may lend important support in doing so.
Originality/value
By linking the different analytical perspectives, i.e. the governor's dilemma vis-à-vis the intermediator or agent and the possible rent-seeking of intermediators, under the condition of a highly developed technology of financial transactions as well as the market structure, the paper offers new insights into the limits as well as new opportunities of regulating financial markets allowing for political accountability of regulators and financial firms.
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Patrick Das, Robert Verburg, Alexander Verbraeck and Lodewijk Bonebakker
Since the 2008 financial crisis, the financial industry is in need of innovation to increase stability and improve quality of services. The purpose of this paper is to explore…
Abstract
Purpose
Since the 2008 financial crisis, the financial industry is in need of innovation to increase stability and improve quality of services. The purpose of this paper is to explore internal barriers that influence the effectiveness of projects within large financial services firms focussing on potentially disruptive and radical innovations. While literature has generally focused on barriers within traditional technology and manufacturing firms, few researchers have identified barriers for these type of firms.
Design/methodology/approach
A framework of internal barriers was developed and validated by means of an explorative case study. Data were collected at a European bank by exploring how innovation is organized and what barriers influence effectiveness of eight innovation projects.
Findings
Six items were identified as key barrier for potentially disruptive and radical innovations (e.g. traditional risk-avoidance focus, and inertia caused by systems architecture). As such, in the sample these were more important than traditionally defined barriers such as sources of finance, and lacking exploration competences.
Research limitations/implications
Based on a small number of projects within one firm, the results highlight the need for more in-depth research on the effects of barriers and how barriers can be overcome within this industry.
Originality/value
The results show that there is a discrepancy between the societal demand for radical change within the financial industry and the ability of large financial services firms to innovate. The study identifies which unique internal barriers hamper potentially disruptive and radical innovation in large financial services firms.
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