new publication (December 2020)
PERSPECTIVES ON LEVErAGED FINANCE AND FINTECH
Topics in corporate finance Issue 28
With the 28th issue of the ACCF Topics in Corporate Finance series, the Amsterdam Center for Corporate Finance seeks to contribute to the current public debate on leveraged financial structures in the economy and on the fintech revolution in financial services, and the challenges for banks and policymakers that it may entail.
This ACCF Topics in Corporate Finance is dedicated to two key public policy issues in finance: one focuses on how to contain highly leveraged financial structures in the economy, the other on the fintech revolution in financial services, and the challenges for banks and policymakers that it may entail. The first contribution by Rolef de Weijs (Professor of Insolvency Law at the University of Amsterdam) and Aart Jonkers (Assistant Professor at the University of Amsterdam Law School) focuses on how to contain financial leverage in Leveraged Buy Outs (LBOs), but also in firms in general. Their basic premise is that limitations on borrowing are needed not only to prevent excessive leverage with its associated (societal) costs, but also to prevent wealth transfers from uncompensated debtors to shareholders. And all this should not stand in the way of legitimate borrowing to finance investment and the operations of the firm. They discuss several approaches in detail, and come to a very interesting discussion when comparing them.
The second contribution, by European Central Bank economists, Peter Hoffmann, Luc Laeven and Lev Ratnovski, together with Arnoud Boot (University of Amsterdam), discusses technological changes and innovations in the financial sector – the emergence of fintech and bigtech (Google, etc.) – and the consequences of that for banks and the challenges that it poses for policymakers. They discuss limitations to these challenges, and the resulting policy implications.