Encouraging investment in SMEs through equity-based crowdfunding

This paper examines the role may be played by the national policymakers in developing equity crowdfunding markets through a proper implementation of European Directives on this field. We analyse all directives and communications dealing with crowdfunding issued by the European Commission from 2000 to 2018. Then, we compare and assess their impact on the national legislation of the analysed countries. Results show that countries which have correctly and fully transposed into law the European Directives - without any infringement or delays - by aligning their national regulations with European objectives (e.g. the United Kingdom) are able to avoid destabilizing phenomena of regulatory arbitrage. Countries with delayed and incorrect transposition and/or wrong application of the directives (e.g. France, Italy, and Spain) are currently facing serious destabilizing effects of international financial markets with modest growth of equity crowdfunding markets. This paper draws attention to the ongoing process of Europe-wide equity crowdfunding regulatory convergence.