Facilitating Securitized Crowdfunding in Singapore and South Korea

Volume: 

24

Number: 

1

Published date: 

June, 2020

Authors: 

Roland Attila Csizmazia

Abstract: 

      The idea of crowdfunding has rapidly gained momentum around the world, as ordinary people have been looking for solutions to compensate for the diminishing interest rates on their investments in bonds and bank savings deposits as a result of the financial crisis in 2008-2009. The authorities have long remained inactive, but due to the rapid growth in popularity of crowdfunding, they have slowly introduced or modified regulations. The regulatory authorities have had to identify the interests of stakeholders to facilitate access to micro and small capital, as well as to create a system for platforms serving as intermediaries between fund receivers and providers, while at the same time protecting individual investors against total loss. This research seeks to find and analyze key reasons for the importance of retail funding in Singapore and South Korea as the two countries share a similar historic and economic background in the post-World War II era. It also examines whether and to what extent the regulatory framework in these two countries is patterned upon the framework created in more developed and experienced countries. It focuses on securitized, that is, equity-based and lending-based, crowdfunding and intends to analyze the development and application of crowdfunding regulations in Singapore, which opted for a modification of existing regulations, and South Korea, which opted for an explicit regulation. The study then seeks to identify the main similarities and differences between these two countries in the context of crowdfunding regulations. Finally, it endeavors to answer the question of whether crowdfunding may become a potential source of funding for Small and Medium Enterprises (SMEs) in these two countries, with a particular focus on startups devoid of the financial resources needed for growth and for the commercialization of new products and services.

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