SS: FinTech & Alternative Finance

Special Session : FinTech & Alternative Finance : Crowdfunding, P2P lending

Aims and Scope

While business angels and venture capitalists have traditionally provided capital to innovative, high-growth startups, new sources have appeared in the form of newer technology-driven crowdfunding platforms. Moreover, new ways to offer financial services have been developed by fintech startups, which will deeply impact the way financial industry will work in the future. All these new developments are part of a group of methods known generally as “alternative financing.” All have a vital part to play in the creation, development, and growth of new technologies, industries, and markets.

On the one hand, the financial resources of the various actors in the capital-raising field tend to be too limited, particularly in Europe, to cover the full range of innovation needs. Moreover, access to credit remains tight for SMEs because of lackluster macroeconomic performance and continued bank deleveraging (Ryan et al., 2014). Non-bank financial instruments, in particular through lending platform (Dorfleitner et al., 2016), are gaining some traction but they cannot compensate yet for the retrenchment in bank lending (OECD, 2016).

On the other hand, the newer capital-raising methods show great promise, from accelerators and incubators, to proof-of-concept centers for science and technology sectors, to university-based seed funds, and capital- or loan-based crowdfunding platforms (Ahlers et al., 2015; Hornuf and Schwienbacher, 2017). The growth of these new prospects for entrepreneurs is opening up exciting new avenues for growth. In fact, we posit that these new ways of raising capital may ultimately challenge the long-term survival of traditional banking business models.

The term “alternative financing” covers the various new models that have emerged outside the traditional financial system that connect fundraisers directly with funders, often via online platforms or websites. On the macro level, the impact of venture capital on innovative activity has been the subject of many investigations (Colombo et al., 2012). Although the scientific research underpinning the phenomenon of alternative finance has been gaining ground, it is still a relatively under-researched field. Moreover, crowdfunding as an industry is still in its infancy. Thus, most extant scholarly research has not begun to identify the implications for entrepreneurs apart from the often-oversimplified anecdotal evidence of success.

The growth in popularity of alternative financing coincided with the aftermath of the global financial crisis of 2008. In some respects, this is the logical answer to a millennial generation that aches to upend traditional rules of financing (and everything else). The market thus far has demonstrated clear signs of strength and continued growth for online alternative finance markets (102.8 billion USD for the Asia-Pacific regions alone in 2015, according to Accounting and Business magazine, 2016). However, we expect that regulating and supervising these markets will be an enormously important issue for their continued evolution.

Thus, it is clear that the future of banking will largely be shaped by new technologies. How concerned should banks be by the rise of such disruptive platforms? Many papers posit a lackluster future for traditional banks. But we note that the banking sector overall is welcoming these new players, and considering them as a parallel secondary financial channel (Beck et al., 2016). It is likely that banks expect to ultimately dominate or acquire them, as they did with stock exchanges, forex, and internet banking. Because as long as the essence of banking (money) remains somewhat under its control, the banking sector is not truly challenged. The real threat for the financial world, and especially for banks, comes in the form of new virtual currencies, such as bitcoins, based on digital blockchain technology (World Economic Forum, 2016).

There is thus an urgent need for research to understand how these topics are interrelated and to evaluate how they may impact the economic development of small businesses. The problem constitutes a rich field of research for academicians. The phenomenon of crowdfunding alone, for example, has many facets, encompassing financial, social, and entrepreneurial business model perspectives. Therefore, the literature should aim to thoroughly explore all the ramifications of the various alternative financing methods, and begin providing guidance on how they are likely to transform innovation, entrepreneurs, and global business and economic development.

We welcome the submission of research papers on the following (non-exhaustive) list of topics:

• How do the business models of the platforms operate, and how are these new actors challenging the traditional strategies of banks?
• What are the advantages and disadvantages of the new methods of raising capital?
• How do alternative finance channels attract funders? How has online unsecured lending rattled the banking world?

• What is the future of digital blockchain technology (e.g., bitcoins) in the financial world?
• Will the new forms of capital raising for small businesses replace venture capital and angel financing?
• How does the emergence of new ways to raise capital encourage the extension of theories in areas such as venture capitalism and IPOs?
• How will the new forms of capital impact the survival and growth of small businesses?
• When and why should entrepreneurs favor a particular form of financing over another?
• How can we best quantify the efficiency and performance of these new capital-raising methods?
• How can we judge the quality of the project selection process of crowdfunding platforms? How can these platforms best rate the projects they are offering for financing?
• What are the regulatory and supervisory issues surrounding the new ways to raise funds?
• How will public regulations affect the future of alternative finance?
• How will alternative financing affect existing finance theories?
• What are the effects of alternative financing on private firm performance?
• Will the value-added effects of alternative financing vary across countries with different levels of institutional development?
• What is the socioeconomic impact of alternative finance, and how do organizations and businesses perform after fundraising on alternative finance platforms?
• Which appraisal methods are most suitable for assessing alternative financial institution performance?

Details of Paper Submission and Due Date

Interested contributors should submit preferably full papers (only in English), but extended abstracts (1,000 to 1,500 words) may also be considered if they show considerable promise no later than April 15, 2018 (extended deadline).