Financial Regulatory Framework Research Articles

An Analysis of the Adaptability of Switzerland’s Financial Regulatory Framework to Blockchain and Digital Currency Innovations

Switzerland has emerged as a global leader in the regulation of blockchain technology and digital currencies, attracting numerous blockchain startups and investors to its “Crypto Valley.” This paper provides an in-depth analysis of Switzerland’s financial regulatory framework, examining its adaptability to blockchain and digital currency innovations. The study highlights the proactive stance of the Swiss Financial Market Supervisory Authority (FINMA) and the enactment of the Blockchain Act, which have created a flexible and forward-thinking legal environment. Furthermore, the paper explores the opportunities afforded by Switzerland’s regulatory framework, such as legal certainty, privacy protection, and access to European markets. However, it also addresses the challenges that remain, including regulatory arbitrage, scalability issues, and the unique regulatory complexities introduced by decentralized finance (DeFi) and non-fungible tokens (NFTs). The findings suggest that while Switzerland has built a conducive ecosystem for blockchain innovation, it must continue to adapt its regulatory framework to maintain its leadership position in an ever-evolving global landscape.

PROMOTING INNOVATIVE ACTIVITIES THROUGH ADVANCED MANAGEMENT AND FINTECH MODELS

Global economy is undergoing profound changes, impacting people's lives, businesses, and competitive landscapes. These shifts are driven by globalisation, continuous socio-economic development, the growing role of knowledge in the economy, and the intensified development and expansion of the European Union. In this evolving environment, new business models are becoming increasingly significant. Business and markets are no longer constrained by geographical boundaries. Products that were once confined to national markets are now exposed to international competition. With the removal of geographical restrictions, global markets for goods and services have essentially become operational around the clock. In response to these new challenges, companies adapt in different ways to new management and financial regulatory frameworks. To address the competitive challenges and increased competition, companies may choose to apply one or more business models that influence their overall performance. However, in the catering sector, particularly during the COVID-19 pandemic and quarantine periods, small and medium-sized enterprise managers have often neglected modern business management techniques, strategic planning, and company management. These elements are crucial for maintaining economic stability, forecasting future trends, addressing emerging issues, and safeguarding against factors that threaten business success and continuity. Recognising the increasing importance of strategic planning and management, alongside the need for scientific research and evidence-based recommendations, it has become essential to analyse a company's strategic position and its operational capabilities within this field. Every organisation must have a clear understanding of its current identity and future aspirations. For an organisation to grow and achieve its objectives successfully, it must employ advanced management methodologies and establish a well-defined strategy – a well-defined operational system. While setting goals can be straightforward, their realisation is significantly more complex. Once a company’s strategy is defined, it requires careful implementation. An action plan must be created to ensure the strategy's success, including budgeting, the development of an effective implementation mechanism, and tools for monitoring and evaluating the quality and progress of the plan. Employees responsible for specific strategy points and plan execution must be assigned. These are the next essential steps for the organisation. The key to success lies in responding swiftly to the ever-changing business environment and adjusting strategic directions and implementation measures as needed with a particular focus on strategic change management and the introduction of new, innovative management methodologies.

Technological revolution and regulatory innovation: How governmental artificial intelligence adoption matters for financial regulation intensity

In the realm of modern financial regulation, the integration of artificial intelligence (AI) is considered to be a potential game-changer. With rapid technological advancement, AI can enhance regulatory capabilities by efficiently processing and analyzing complex financial data. This approach allows for more precise predictions and prevention of market risks, effective monitoring of potential market abuses, and a deeper understanding of financial markets. As a result, AI can substantially improve the efficiency and impact of government regulatory frameworks. This study examined the impact of governmental AI adoption on financial regulatory intensity in China, revealing significant findings across 30 provinces and municipalities from 2012 to 2022. The relevant findings are fourfold. (1) Governmental AI adoption for financial regulation significantly strengthens financial regulatory intensity. (2) The institutional environment and government transparency have respective promotional and restraining influences on this process. (3) Further tests reveal a nonlinear impact of governmental AI adoption for financial regulation on regional financial regulatory intensity. (4) Heterogeneity analysis demonstrates that the enhancing effect of governmental AI adoption is more pronounced in regions located in the east, with strong governance capabilities and well-developed digital environments. The conclusions of this study provide empirical evidence and practical guidance for local governments to develop and refine financial regulatory frameworks by adopting AI.

Reaping Digital Dividends: The Impact of Supply Chain Finance on Corporate Technological Innovation in China

ABSTRACT As a new type of financial service, supply chain finance closely relates to the production and innovation behaviors of micro-size enterprises. This research thus explores whether and how supply chain finance affects corporate technological innovation. Using a sample of China’s A-share listed companies from 2013 to 2020, the results show that (1) supply chain finance significantly enhances the technological innovation of enterprises; (2) the beneficial effect of supply chain finance on enterprises’ cooperative innovation is more pronounced compared to that on independent innovation; (3) mechanism tests find that supply chain finance promotes enterprise innovation by alleviating financing constraints and adjusting supply chain relationships; and (4) this promotion effect is stronger for private enterprises, small-scale enterprises, in west regions, and for regions with a high level of digital financial development. Our empirical results thus enrich the literature, provide insights into the optimization of supply chain finance development, and can help improve the financial regulatory framework.

The role of European banking legislation for financial stability

In recent decades, financial institutions, including banks, insurers, pension funds and investment firms, have faced increasing regulatory changes, particularly within the European Union. Recent global events have further modified the financial regulatory framework of the European Union, and some changes also bring risks, requiring new supervisory tools. This article provides an overview of the changes, focusing on European banking and financial law, which is at the heart of three main economic topics: the financial market, financial-banking institutions and cross-border financial transactions. The dynamic nature of these regulations underlines the need for continuous adaptation in the industry. This article serves as an introduction to current developments for understanding the wider context of European financial law and its implications for stakeholders.

Integrating Climate Change Risks and Sustainability Goals into Saudi Arabia’s Financial Regulation: Pathways to Green Finance

This study examines the integration of climate change risks and sustainability goals within Saudi Arabia’s financial regulatory framework to enhance green finance initiatives aligned with Vision 2030. A qualitative research design synthesises insights from a comprehensive literature review, semi-structured interviews with domain experts, and a detailed analysis of critical Saudi green finance frameworks and legislation. This research identifies mechanisms for embedding sustainability in the financial sector and addresses the challenges, opportunities, and strategic directions essential for Saudi Arabia within the global context of sustainable finance. The findings reveal a robust foundation laid by Vision 2030 initiatives yet underscore the need for enhanced regulatory frameworks, increased market readiness, and greater societal engagement. This study highlights a significant literature gap in understanding Saudi Arabia’s unique approach to green finance amid its economic diversification and sustainability goals. Contributing to original insights, this research underscores the critical role of Saudi Arabia in the global energy market and its substantial economic and environmental transformations. It offers detailed analyses and recommendations that enrich the discourse on sustainable finance, impacting policymakers, financial practitioners, and scholars.

Resource curse in OPEC with varied levels of financial regulations and constraints: The role of oil price shocks and digital finance

Economic growth and development are crucial for global economies, and a nation's physical, human, and natural resources significantly impact its trajectory. Natural resource-rich nations can benefit or face the resource curse. Henceforth, this study examines the economic growth of Organization of the Petroleum Exporting Countries (OPEC), considering digital finance, financial regulations, and oil price shocks. Understanding the intricate relationship between oil price fluctuations and digital finance within diverse financial regulatory frameworks is essential for a comprehensive grasp of the resource curse in OPEC. The research employed a bias-corrected dynamic panel and MMQR model to analyze datasets from 2004 to 2022. The study reveals that Oil price shocks have led to higher economic growth when there are moderate financial constraints. However, they have a detrimental effect when the financial system is either very constrained or highly unconstrained. Digital finance has been shown to enhance Gross Domestic Product (GDP) across various levels of financial regulations. The GDP of OPEC experiences a significant adverse effect when digital finance and oil price shocks are coupled, particularly in the presence of stringent financial rules. This outcome is mainly attributed to the adverse influence of oil prices. The findings above underscore the need for moderate levels of financial regulations that support the favorable influence of oil prices and digital finance on GDP. The study additionally suggests a prospective strategy for enhancing GDP growth in OPEC nations: facilitating digital finance.

Accurate Construction of Intelligent Investment Advisory System Based on the Integration of AI Algorithms and Financial Regulatory Framework

Accurate Construction of Intelligent Investment Advisory System Based on the Integration of AI Algorithms and Financial Regulatory Framework

Financial Regulatory Technologization in the Context of Europe`s Digital Decade

The European Commission (EC) announced the Digital Decade as a vision for digital transformation of Europe by 2030 in four directions: skills, infrastructures, business, and government. Meanwhile, there is also an increasingly strong dependence of the financial sector on various technological innovations. Regulatory technologies in this regard play a key role in ensuring compliance with the ever-complex financial regulatory framework. The article analyzes the current state and prospects for the financial supervision system from the perspective of the European digital strategy. Emphasis is placed on the possibility of implementing smart technologies in the prevention of various financial violations and the formation of new levels of partnerships between financial institutions, regulators and RegTech firms as providers of regulatory expertise.

The Coordination Between Macro-Prudential Supervision and Monetary Policy — From the Perspective of Financial Stability

The onset of the 2008 economic crisis forced central banks to acknowledge that the monetary policy and micro prudential policy-based financial regulatory framework is insufficient to avert systemic risks. Compared with the low efficiency of micro prudential supervision in preventing and controlling financial systemic risks and the weakness of a single monetary policy tool in controlling financial systemic risks, the current theorists agree that monetary policy and macro prudential supervision policies are effective in coordinating and resisting financial risks. The link with both macro prudential regulation and monetary policy, as well as how to collaborate and coordinate the two policies, are thus major issues that we must address. Based on this background, this paper systematically combs and analyzes the necessity of coordination between monetary policy and macro prudential policy and the practical experience of relevant research on coordination mode through theoretical research on macro prudential regulation and reference of relevant policies at home and abroad. This paper uses the literature research method and comparative analysis method to analyze the macro prudential policy and monetary policy in depth. The theoretical basis of macro prudential regulation and monetary policy is formed by classifying, summarizing and sorting out the relevant researches on macro prudential regulation and monetary policy made by scholars from various countries. The implementation of macro prudential policies in developed economies like the United States and the United Kingdom, as well as their monetary policy coordination models, are compared and introduced in this dissertation. It also examines the traits and practical application of macro prudential and monetary policy cooperation in various nations. Based on the systematic risk theory, micro prudential supervision, macro prudential supervision theory and monetary policy, combined with the current situation of financial regulatory structures in various countries, using the literature research method and comparative analysis, this paper mainly draws the following conclusions: The financial system can only continue to run smoothly under a combined application of macro and micro prudential regulation; Systemic hazards can be efficiently prevented and mitigated by macro prudential oversight methods; Traditional monetary policy is unable to preserve both financial system stability and monetary stability; According to international experience, the central bank’s coordination of monetary policy and macro prudential policy can better play the complementary effects of the two programs.

Transparency and Information Asymmetry in Financial Markets

Abstract The paper deals with the application of aspects of behavioral finance in the context of investor protection reflected in EU financial regulation which puts an emphasis on disclosure requirements. Traditionally, financial regulatory frameworks maintain a status que assumption of “rational investors” contained within neoclassical economic theory, however reoccurring financial incidents have exposed a critical flaw in this understanding, consequently requiring a further examination of behavioral aspects within the context of financial regulation. It remains ambiguous how regulators may best use findings from behavioral finance to address flaws in their investor protection tools. Furthermore, neither expanding disclosure obligations nor enforcing a tougher paternalistic approach may suffice in their intent.

Differentiated de-Europeanisation: UK policy-making in finance after Brexit

ABSTRACT This paper examines the impact of Brexit on UK financial services policy, explaining recent reforms to the domestic financial regulatory framework and assessing the prospects for future divergence from EU rules. Deploying the lens of de-Europeanisation, we show that the failure to include financial services in the final UK-EU Trade and Cooperation Agreement necessitated major institutional changes. By contrast, there has been very limited change to date with respect to policy, while the government’s ambitions for a ‘Big Bang 2.0’ package of regulatory reforms have been significantly scaled back. Drawing on insights from the political economy of finance, we argue that this process has been shaped by contested adaptational pressures mediated by three key variables: business unity, financial stability, and administrative capacity. The result is an emerging pattern of differentiated de-Europeanisation in financial services, ranging from intentional regulatory divergence to active alignment with EU rules.

International Financial Reporting Standards [IFRS] and Corporate Governance: A Survey of Nigerian Deposit Money Banks [DMBs

The study examined the effect of the International Financial Reporting Standards [IFRS] implementation on the corporate governance of Nigerian banks. The specific objectives of the study were to examine the effect of IFRS implementation in promoting corporate accountability by banks; the effect of IFRS implementation in strengthening the financial regulatory framework of banks and the effect of IFRS implementation in enhancing corporate disclosure of banks. The study adopts the descriptive survey research design. The sample comprised 144 respondents in banks in the chosen geographical area. The results showed that IFRS implementation promoted corporate accountability in Nigerian banks. There is a significant effect of IFRS implementation in strengthening the financial regulatory framework of banks. Lastly, IFRS implementation has enhanced the corporate disclosure of banks. The study recommends that CBN should further enact rules that promote accountability in the banking sector. Stiff penalty for late default on issuing annual reports, not allowing any single individual to acquire more than 20% shareholding, among others. The sustainability disclosure guideline by the NSE to promote corporate social responsibility among quoted companies should also be enforced for banking institutions. The harmonisation of the diversified corporate governance codes should be further revisited. A clear distinction between the duties and responsibilities of the CBN and FRC may further avoid overlap of functions which may lead to friction.

Banking regulation in the United States after the world economic crisis of 2007/2008: economic immunity or false hopes

Based on the Post-Keynesian approach, we argue that commercial banks, through the financial reforms of 1980 and 1999, which made financial institutions more flexible, increased their capacity to operate in the capital market by becoming Banking Financial Holding Companies. The 2007/2008 crisis is understood as a consequence of financial deregulation and financial innovation process that weakened the Federal Reserve's capacity to restrain banking activity. Initially, we discuss the new institutional context that emerged from these changes in the financial regulatory framework between 1980 and 1999. Then, we focus on how financial deregulation allowed banking business to advance in financial markets, how this process contributed to the economic crisis of 2007, characterized both as a liquidity crisis and a solvency crisis, safeguarded by the National States. Finally, we analyze the Dodd-Frank Law (2010), which is interpreted as the reaffirmation of this endogenous process of financial domination.

Financial inclusion and economic growth: What roles do institutions and financial regulation play?

AbstractThe extant literature indicates that financial inclusion has a direct influence on economic growth. This has been examined by previous studies by analysing the link between financial inclusion and economic growth. This study uses the two‐step system GMM approach to investigate the moderating role of financial regulation and quality of institutions on the linkage between economic growth and financial inclusion in Africa, using balanced panel data of 52 African countries spanning 2002–2019. The findings reveal a number of things; (i) financial inclusion, financial regulation, and all proxies of institutional quality exert strong and significant effects on economic growth; (ii) institutional quality enhances the impact of financial inclusion on economic growth; iii. Financial regulation dampens the effect of financial inclusion on economic growth. Based on these findings, we recommend the following; (i) central, local governments, and policymakers should formulate public policy that promotes inclusive finance. Such policies should aim at removing barriers and constraints such as excessive customer identification requirements that hinder people from gaining access to finance; (ii) central governments and policymakers in Africa should refine policy that promotes the involvement of the citizenry in governance processes, promote accountability of public institutions, ensure effective governance systems, controls corruption, promote rule of law, and political stability and ensure quality legal and regulatory regimes; (iii) African central governments should fine‐tune policy aimed at strengthening institutions and the regulatory framework. By implication, strong, independent, and quality institutions coupled with sound financial regulatory framework is required to spur the growth of African countries.

Comparative Study on Quality Characteristics of International Accounting Standards and Chinese Accounting Standards

Whether accounting information can meet the needs of users depends on the quality of accounting information. The internationalization level of accounting standards reflects the degree of integration of a country's economy with the world. With the development of economic globalization and rapid progress of science and technology, the market economy is becoming more and more active. Meanwhile, the trade between various countries is becoming more and more frequent, which promotes the economic and trade cooperation between various countries. The demand for international convergence of accounting standards is becoming increasingly strong, and the relevant concept arises at the historic moment. In order to make the cooperation between countries more convenient and fast, countries began to integrate into the financial regulatory framework reform process of cooperation, and strive for the global unified high-quality accounting standards can be completed in a timely manner. This paper compares and analyzes the differences between Chinese and international accounting standards in terms of information quality characteristics from two aspects of content and level, summarizes the convergence and development trend of international accounting standards, and puts forward some suggestions for China to formulate accounting standards.

Does Institutional Quality Influence Financial Deepening In Selected African Countries?

This study finds new evidence that institutional quality matters in determining cross-country variation in financial deepening in Africa. Using the system-generalised method of moments (sys-GMM) technique on a sample of 35 African countries from 2005 to 2018, the study finds that: (1) while macroeconomic stability is vital for promoting financial deepening, it is not sufficient. Strong institutional quality, such as good governance systems, play a huge role in fostering financial deepening in African economies, and in determining cross-country variations, and (2) fiscal deficits or widespread financial indiscipline have constrained credit provision in Africa resulting in high cost of borrowing and crowding-out the productive private sector. Therefore, this study concludes that deepening financial markets will require prioritising institutional policy reforms aimed at fostering accountability, sound, and effective financial regulatory frameworks, honour the rule of law, control corruption, and rent-seeking behaviour.

The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe

The advent of mobile money innovations has given people in rural areas, informal settlements and other poor communities an opportunity to participate in Zimbabwe's mainstream financial economy. However, the technology-driven money services have presented some challenges to the traditional banking sector in general and the regulation of financial services in particular. Firstly, most mobile money services are products of telecommunication corporations, which are not banks. Telecommunication companies use their network reach to provide mobile money services via mobile devices at a cheaper cost than banks across the country in Zimbabwe. As such, banks face unprecedented competition from telecommunications companies that are venturing into financial services. It also appears that prudential regulation of banks cannot keep up with the fast pace at which technological innovations are developing and this has created a disjuncture between the regulation and the use of technological innovations to promote financial inclusion in Zimbabwe. The Banking Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act [Chapter 22:15] 5 of 1999 and the National Payment Systems Act [Chapter 24:23] 21 of 2001 have a limited scope in terms of the regulation of mobile money services in Zimbabwe. The Ministry of Finance and Economic Development launched the National Financial Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial inclusion of the poor, unbanked and low-income earners in Zimbabwe. However, the NFIS appears to push more for bank-led financial inclusion than it does for innovation-driven initiatives such as mobile money services. This article highlights the positive influence of mobile money services in improving financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. The article also seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy. It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe.

The Current Situation of International Accounting Convergence and the Strategic Choice of International Convergence of Accounting Standards for Chinese Enterprises

With the deepening of world economic integration, IFRS has become more and more widely used worldwide. Under the new situation that the current international financial regulatory framework is being rebuilt, the international accounting landscape is undergoing major adjustments, and the international accounting standard setting agencies are actively promoting the reform of governance structure, my country needs to review the situation, follow the trend, and choose an international accounting standard that meets the needs of national conditions.

Financial Stability Amidst the Pandemic Crisis: On Top of the Wave

Financial Stability Amidst the Pandemic Crisis: On Top of the Wave