Reconceptualization of Corporate Governance for Fintech Firms

40 Pages Posted: 19 Sep 2023

See all articles by Isa Alade

Isa Alade

Deakin University, Deakin Law School

Date Written: August 2, 2023

Abstract

[enter Abstract Body]The recent scandals involving some major fintech firms/platforms such as FTX, Wirecard, Celsius, TerraLuna and Lending Club raise questions about the efficacy of the current corporate governance architecture for fintech firms. Comparing some of the factors that contributed to these recent scandals in the fintech industry against the weaknesses in the corporate governance arrangements for traditional financial firms in the period leading to the global financial crisis (GFC), this paper argues that the unique characteristics of fintech firms amplify some of the weaknesses in the corporate governance arrangements in the financial services industry that contributed to the GFC. The ubiquitous nature of fintech firms and their algorithm/automation-based operations defy key assumptions of traditional corporate governance principles which are built on the actions of identifiable individuals responsible for the management of a corporation. These peculiarities amplify the potential for fintech firms to create systemic risks in the global financial system like the ones that resulted in the GFC. On this basis, the paper proposes a redesign of the corporate governance regime to meet the realities of the fintech phenomenon and forestall dangers to the global financial system.

Keywords: fintech regulation, corporate governance, global financial crisis

Suggested Citation

Alade, Isa, Reconceptualization of Corporate Governance for Fintech Firms (August 2, 2023). Loyola of Los Angeles International and Comparative Law Review (Forthcoming), Available at SSRN: https://ssrn.com/abstract=4554789 or http://dx.doi.org/10.2139/ssrn.4554789

Isa Alade (Contact Author)

Deakin University, Deakin Law School ( email )

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