China faces a number of important financial-stability risks. A persistent feature of the Chinese banking sector is the rapid formation of non-performing loans (NPLs) during each business cycle. Moreover, lending restrictions and interest-rate caps (“financial repression”) have, in part, given rise to an ever-expanding shadow-banking sector. The article highlights five cardinal sins within the Chinese financial system: (1) bad lending practices by the regulated sector, (2) lax governance, (3) a shadow-banking system that is dominated by short-term claims with no liquidity backstop, (4) stark lack of transparency in the shadow sector, and (5) very high levels of interconnectedness between the shadow and the regulated sector. The article suggests that some of these problems will be alleviated through a regulatory big bang that would abolish the current silo approach to financial regulation streamlining financial stability and conduct/consumer-protection supervision. Furthermore, we recommend the introduction of a binding and all-encompassing leverage ratio that will require banks to hold much higher capital buffers as a means to boost bank resilience, reduce NPLs, and battle interconnectedness with the shadow sector.

In this article, I evaluate the status of law and economics in Japan from 1990 to 2016. Through the literature review, we can see distinctive features that did not exist in 1990: the establishment of the Japan Law and Economics Association, change in methodologies, increase in empirical research, expansion of research fields, and influencing policies and statutes in the real world. I then conduct case studies about how law and economics research in Japan offers policy recommendations. I present two examples: repeal of protection of short-term leases and establishment of fixed-term building leases. Finally, I explore the outlook of the next stage of law and economics in Japan. More emphasis on empirical research and more English publications on law and economics in Japan are important to move to the next stage.

Corporate law shapes the fundamental business environment and affects various stakeholders. It is possible to determine the behaviour of various stakeholders by examining the politics of the reform process of corporate law. In order to understand the process, this paper uses the notice-and-comment procedure (public-comment procedure). Under this procedure, people submit comments to the Ministry of Justice; some of the comments are reflected in the final Bill, while others are not. The paper performs a quantitative analysis of a hand-collected dataset from two recent public-comment procedures on corporate law reform. The results showed that the bureaucrats are rigid and not willing to take public comments seriously. However, on some technical issues, legal academics, and legal professionals influence the behaviour of the bureaucrats. In addition, the bureaucrats employed these comments to honour the technical views of professionals. In other cases, corporate managers significantly influence the reform process.

Along with China’s economic downturn, there has been an increase in the size of China’s underground lending market. The mounting risk in connection with this underground lending market triggers tremendous interest and debates over appropriate and effective regulatory responses. Because of its private and non-transparent character, the underground lending market is likely to confound those seeking to find “black letter” law governing its regulatory framework. Instead of relying on its conventional tighten-up strategy—using the muscle of the Criminal Law—China has orchestrated an experiment by allowing local legislation to formalize part of the underground lending market, as well as a judicial approach by recognizing a higher interest rate charged by underground lenders to borrowers. This article tries to understand the underlying rationale of regulatory and judicial movements through both law and society, and law and finance lens.

Providing a survey of empirical law and economics scholarship in China, this paper shows the binary categories of quantitative versus qualitative studies are inadequate. Instead, two paths for future research in empirical law and economics in China are identified, namely studies based upon individual cases and studies that apply social scientific tools to analyze data, such as statistical and experimental tools. This paper also emphasizes the unique value of empirical law and economics for Chinese scholars in the increasingly globalized academic world.

Although the legality of equity-based crowdfunding was determined from a judicial point of view in the “first crowdfunding financing case” in 2015, there is no formal law, regulation, or rule released to regulate the crowdfunding financing. From a micro-perspective, determining the nature and workings of equity-based crowdfunding are two preconditions for determining the legal framework for and supervision of equity-based crowdfunding. The “Open, Public, Small-sum” characteristics defined the nature of public offering to the equity-based crowdfunding; therefore, it should be distinguished from private equity financing as a different category of online equity financing. Based on the original purpose of “financing facility” and the nature of “grassroots finance,” fundraisers shall enjoy exemptions on small sums, and the threshold of investors shall also be appropriately restricted, while the intermediary platform shall be the regulatory focus. From a macro point of view, the supervision of equity-based crowdfunding should seek a balance between “financial innovation” and “risk control.” Equity-based crowdfunding should not simply be considered a financing method. Rather, its positive effects on mass entrepreneurship and innovation should be emphasized so as to make it a particularly important “booster” to promote economic and social development.

The market of a successful financial centre must be efficient, orderly, and fair, which requires that investor protection rules be enforced effectively. While a substantial literature exists promoting privately driven enforcement of investor protection rules, there is a growing consensus that enforcement action by public bodies is likely to be more important for most markets than privately initiated litigation. Hong Kong exemplifies this point. In Hong Kong, public authorities carry almost the entire burden of enforcing corporate and securities laws. Yet Hong Kong functions at a high level of quality globally despite operating a market in which most companies are foreign-incorporated—often originating from jurisdictions with reputations for governance that are middling at best—and trading takes place in multiple currencies. To revisit the debate on the determinants of effective corporate and securities law enforcement, this paper evaluates the enforcement of investor protection laws in Hong Kong. The paper first examines the institutional context, presenting key corporate and securities regulation and explaining avenues for private and public actions. It looks at the powers and competencies of the relevant supervisory authorities, including the stock exchange, which has a quasi-public role in regulating the market. Then, using publicly available data supplemented through interviews with agency staff, the paper presents Hong Kong’s enforcement “inputs” (funding and staffing) and “outputs” (actions and sanctions) for the main public enforcers. We find evidence that the Hong Kong public enforcement model effectively disciplines even its dangerous environment of foreign companies, controlling shareholders, and complex, international groups, and might be able better to do so exactly because of a focus on public, rather than private, enforcement.

Online supply-chain financing has been a relatively novel funding channel for suppliers as small- and medium-sized enterprises (“SMEs”) to obtain loans in that the revolution of financial technology (“FinTech”) transforms traditional supply-chain financing, which used to be administered only by official banks, to an online model also used by electronic commerce platforms (“e-commerce platform”). Endeavours towards financial inclusion of the underserved SMEs could rationalize why we should allow for or encourage FinTech innovations exemplified by the online supply-chain financing mentioned above. What would be an adaptive regulatory regime for such innovative FinTech-enabled financial services as the online supply-chain financing? Within our conceptual framework to regulate the FinTech industry at the early stage, rather than rigorous rules traditionally placed on large financial institutions, a principles-based strategy should be adopted to strike a balance between financial stability and access to financial services advanced by disruptive innovations. As a necessary complement, regulatory sandboxes would be needed to spur a shift in institutional philosophy to a principles-based regulatory regime. In other words, the regulatory attitude of FinTech regulation should be humble and light-touch to promote innovation for improving digital financial inclusion, albeit on the premise of containing potential systemic risk and protecting consumer interest in the meantime.

This paper points out the problems of the current law on directors’ duties that forces directors to ignore stakeholder interests, with the unintended consequences of misallocation of resources and the weaknesses of a traditional legal approach to law reform, and uses multiple stakeholder boards as an example to demonstrate how an economic efficiency approach to law reform, adopting economic principles, could avoid some of the unintended consequences of a legal approach to law reform and help design better rules that promote allocative efficiency for the benefit of society as a whole. It argues that international organizations should take the lead in promoting the use of stakeholder directors in the board of directors of multinational corporations that have a history of corporate abuses for corporate decisions that have an impact on all stakeholders.

The strong growth of Islamic capital markets internationally has seen the corresponding development of regulatory frameworks incorporating sharia law. Malaysia has been at the forefront of Islamic capital market regulatory development, merging corporate law drawn from its common-law heritage with sharia principles. This article examines the interaction of law with political economy and sociocultural influences in Malaysia which has underpinned the evolution of hybrid Islamic capital market regulation. It analyses the evolution of Malaysian Islamic capital market regulation against theories of legal origin and legal evolution. The analysis suggests that the sharia and common-law components of Islamic capital market regulation have evolved along two separate and seemingly inconsistent trajectories. While the secular corporate law component continues to evolve in tandem with its common-law tradition, development of the sharia component represents a distinct shift away from common-law traditions.

As modern constitutions speak in the name of the people, they contribute to constituting the body politic by making potentially contentious claims about its members’ identity, rights, and duties. Focusing on the North and South Korean Constitutions, this article examines the claims about peoplehood articulated in both texts since their concurrent adoption in 1948. The analysis argues that these claims are irreducible to the North and the South competing over two ideologically antagonistic conceptions of the body politic—a rivalry supposedly embodied in and magnified by their constitutions’ use of differentiated terms to designate the people: inmin and kungmin. Instead, these categories should be seen in light of their synchronic commonalities in the North and South Korean Constitutions as well as diachronic transformations throughout the successive versions of each text, revealing that constituting the people has been less a matter of conflict between both Koreas than within each.

This article evaluates reparation by the state after four of the worst episodes of violence against religious minorities in independent India. Examining official records obtained through India’s law on the right to information, I analyze government aid to victims after identity-based massacres over a 20-year period. I argue that there is a well-established repertoire of assistive measures after sectarian violence but, despite the resources available within a politically stable state, aid for victims of mass violence in India is unimaginative and meagre. I argue further that the political opportunity structure for reparations is limited by the fact that sectarian mobilization is embedded within electoral politics in India. Just as sectarian politics led governments to tolerate mass violence, it constricts the checks and balances that might lead to adequate reparation after violence subsides. I then suggest that opportunities to negotiate better reparation for victims expand over time, and propose that a law on reparation would constrain state bias and strengthen opportunities for victims to demand the support that they need.

The adjudication of religious personal laws of minority communities in India has been a domain of contestation between competing claims of cultural autonomy, gender justice, and individual rights. The Supreme Court of India has time and again been confronted with the conflict between the secular law and legislation that protects group rights of minorities. While the existing literature has taken note of the attempts by the Indian state and the judiciary at legal-pluralist interventions to secure gender justice within the framework of personal laws based on religion, there has not been a sustained analysis of the discursive construction of constitutional law in dynamic interaction with the secular law and tenets of religion. This paper attempts to address this important gap in the scholarship using a discourse analysis of the judgments of the Supreme Court of India from 1985 until 2015 pertaining to post-divorce maintenance for Muslim women. I examine how the “rights” of Muslim women are framed in a realm of dynamic interaction between legislation premised on community identity, notions of constitutionalism, and personal laws based on religion to argue that the state adopts an interventionist role in a legal-pluralist paradigm; it further uses the specificity of community identity to foreground a vision of social justice.

In 2014, the Indonesian president signed a new Village Law (no. 6/2014). This statute started a new phase in the ongoing history of village governance policy, moving the village from a position as an administrative unit in a top-down system towards one of an autonomous community. The present article analyses how distinct “policy communities” in Indonesia started a process that helped shape the 2014 Village Law in order to promote their long-term political agendas, how their involvement was facilitated by the particular features of Indonesia’s law-making process, and how they managed to get a Bill passed that went against considerable vested interest from government bureaucracies. However, they have been less successful in securing implementation of the new law, as this process is still dominated by the government bureaucracies that were “defeated” in the law-making process.

This paper revisits the concept of critical legal pluralism, which treats the individual as a site of normativity with the capacity to create legal knowledge. To help operationalize the usage of critical legal pluralism, I propose a methodological approach that places the individual’s ability to makes choices along a continuum. On one side of continuum, legal pluralism can be viewed as facilitating fully discrete choices that ascribe to one legal order or another. On the other side, the ability to make individual choices is curtailed because of the presence of a hegemonic legal order. This simple continuum helps to shed light on the complex considerations that affect individual choices, which in turn affect how various legal orders are legitimated. The paper then considers how critical legal pluralism can enrich the discussion on the legal system of Afghanistan, focusing on interviews with two Afghan justice actors: a former judge and an active defence lawyer.

This article examines the government-funded legal aid system of Bangladesh. It indicates that the Bangladeshi legal aid system is lacking in terms of both legal provisions and the actual performance of the Legal Aid Services Act. The inadequacies in the implementation of the Act even raise the concern of whether the government has any intention to use the legal system to improve the condition of the poor or whether it intends to establish a legal aid system that is directed to providing mere lip service to the poor. The Bangladeshi legal aid system is therefore in a paradox; the state has established an institution that exposes its drawbacks and is not able to meet the needs of the beneficiaries. The article finally makes recommendations in order to redress the deficiencies of the system and thus to ensure effective access to justice for those who are in need of the service.