Geographic risks presented by crowdfunding of investment and credits for real estate projects

Abstract

Crowdfunding is a manifestation of the  collaborative economy. In Spain, the collective  financing of investment and loans  is regulated  through the Law for the  Promotion of Business Financing. The  phenomenon itself  based on  digital technology and  Spanish regulation, consequence of its integration in the European Union, allows  a globalization of the  phenomenon.  However, the  EU  would like  to achieve  a total globalization of the same  by creating  a pan-European space in which participative financing service  providers (PSFPs)  endowed with a European label, which allows   it  to  carry  out  intermediation  operations throughout  the  territory, above  the  borders  of  the  country where  the  PSFP  had  its  headquarters. This  inte- grated market is a place open  to PSPF of non-EU nationality, and  where  we could run  European promoters or  not,  as  well  as  European and  non-EU investors, all that  implies a global  globalization of  the  phenomenon, being  the  community ter- ritory  «the  incubator» for a economy of  scale  and  an  very  important red effect  of the big Fin Tech operators of participative financing services.  However, the frag- mentation of  the  market for  participatory financing in  the  territory  of  the  EU  is natural and logical, justified by the idiosyncrasy and needs  of each national market. The  anonymity of the  internet and  globalization (geographic  risks)  generate  greater insecurity in  the  consumer that   the  security that   apparently seeks  to  be  offered by  harmonizing  regulations, being  more  vulnerable to  situations of  fraud,  which together  with a possible  bankruptcy of PSPF could  determine a systemic financial risk  throughout the  EU  territory.  Thus, PSPF  captures large masses of  investors through its economy of scale and,  On the other  hand, SMEs (potential PSFP clients as project  promoters), represent  more  than  98%  of all companies in  Europ.