BigFintechs and Their Impacts on Macroeconomic Policies

The Dialogue on Global Digital Finance Governance Paper Series

17 Pages Posted: 8 Jul 2021

See all articles by Katherine Foster

Katherine Foster


Sofie Blakstad


Sangita Gazi

The University of Hong Kong - Faculty of Law; Yale Law School; Fintech and Blockchain Program

Martijn Bos


Date Written: June 21, 2021


This paper follows directly from the paper “BigFintechs and their Impact on Sustainable Development”, which examines the positive and negative impacts of BigFintech (BFT) activities across the full spectrum of the Sustainable Development Goals (SDGs), particularly with regard to Least Developed Countries (LDCs). This paper serves as an extension of the analysis, specifically on the findings with regard to SDG 16 (peace, justice and strong institutions) to focus on the macroeconomic impact of BFT actors and activities on LDCs. To accomplish the extended analysis, we first address the limitations in bridging BFT activity, SDG indicators and LDC macroeconomic policy impacts. We draw upon the outline of the complex and opaque supply chains, expanding service offerings across multiple business verticals, and the complex ecosystem models that amplify BFT impacts for LDCs. We discuss the key barriers in advancing the analysis including the limitations of the frameworks, tools, indicators and data, to measure the macroeconomic impacts, particularly within the LDC context. Our findings demonstrate that the current narrative ‘digital economy’ sees digital growth, maturity, and market penetration in LDCs largely as positive developments. However, it fails to address the potential for adverse impacts on LDCs specifically owing to BFTs’ complex models and business activities. We then outline the regulatory challenges related to BFT across multiple factors including the cross-border nature of BFT ecosystems and activities, the narrow scope of those digital services, the limitations of foreign exchange rules and taxation classification.

In this paper, we set out the positive impacts of BFTs on reducing inequalities, access to capital, increased employment and entrepreneurship and GDP growth, as well as more complex negative implications including potential tax avoidance, crowding out of local businesses and SMEs, evolving ecosystems of interdependence with single points of failure, the potential for draining liquidity from local financial systems and for currency substitution. We discuss the regulatory capacity to address these macroeconomic impacts as well as the new potential points of failure being introduced. The paper then addresses the limitations of current governance parameters and structures that are struggling to keep up with the power, size and complex business model evolution of BFTs generally.

The paper points to a widening gap in terms of primary or targeted regulatory focus for LDCs, which are not generally within the scope or mandate of regulators and legislators in more developed markets where most BFTs are headquartered. A summary of the potential macroeconomic impacts and regulatory challenges is followed by a series of conclusions indicating that rather than expanding their current value proposition of financial inclusion, employment and economic growth, BFTs can actually bypass or exploit segments of communities in LDCs with negative environmental, social and economic impacts. We further extrapolate the potential negative impact of BFTs on financial or currency stability that could bypass engagement with national taxation and regulation, through shadow banking particularly given the fragmented regulatory space. Finally, we offer key recommendations to consider with regard to alternative incentives and tools for BFTs to address and report on activities and impacts in LDCs, as well as innovative regulatory approaches for more effective measurement, analysis and remediation of risks and impacts of BFTs on LDCs.

Keywords: BigFintechs, UN Sustainable Development Goals, Macroeconomic Policy, Macroeconomic Impacts, Financial Regulation

Suggested Citation

Foster, Katherine and Blakstad, Sofie and Gazi, Sangita and Bos, Martijn, BigFintechs and Their Impacts on Macroeconomic Policies (June 21, 2021). The Dialogue on Global Digital Finance Governance Paper Series, Available at SSRN: or

Katherine Foster

Independent ( email )

Sofie Blakstad

hiveonline ( email )



Sangita Gazi (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong

Yale Law School ( email )

127 Wall Street
New Haven, CT 06510
United States

Fintech and Blockchain Program ( email )

Newark, NJ
United States

Martijn Bos

Independent ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics