Financial Innovation Crowdfunding: Friend or Foe?

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 Procedia - Social and Behavioral Sciences 195 ( 2015 ) 353 – 362 
Available online at www.sciencedirect.com
ScienceDirect
1877-0428 © 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license 
(
http://creativecommons.org/licenses/by-nc-nd/4.0/
).
Peer-review under responsibility of Istanbul Univeristy.
doi: 10.1016/j.sbspro.2015.06.334 
World Conference on Technology, Innovation and Entrepreneurship
Financial Innovation - Crowdfunding: Friend or Foe?
Semen Son Turan 
a
*
a
Abstract
MEF University, Istanbul, Turkey
A phenomenon with a considerable past, and with new conspicuous investment models and financial products and services 
proliferated through the Internet; financial innovation seems to be almost ubiquitous these days. While there are numerous 
advantages, especially nowadays through the exploitation of easily accessible, low cost and convenient e-commerce platforms, 
innovation in the finance sector does not come without its perils. Banks and traditional financial institutions are losing chunks of 
market share to virtual intermediaries and investors are operating in relatively less regulated and, consequently, less secure 
environments. Furthermore, from the perspective of all stakeholders, there is a Knightian uncertainty component of the long-term 
ramifications in investing in and through newly developed products and platforms. As such, it is only recently that economic 
history witnessed the outbreak of the sub-prime mortgage crisis caused by the unraveling of a chain of events interlinked through 
the imprudent use of “innovative” derivative transactions involving credit default swaps backed by the insatiable appetite of the 
“irrationally exuberant” investor and the easement of regulation paving the leeway for predatory lending. This paper investigates 
whether and to what extent innovative investment models such as crowdfunding, as the game-changer, forcing the tightly 
regulated securities markets to adapt to the rules of the WEB 3.0 era and relieved through the provision, Title III, of the JOBS 
Act, could be a potential peril. To that end, it discusses the evolution of the equity crowdfunding model in the realm of the 
technology push - demand pull framework and analyzes the current situation of the market.
© 2015 The Authors. Published by Elsevier Ltd.
Peer-review under responsibility of Istanbul University.
Keywords:
Innovative Investment Models; Crowdfunding; Technology Push Demand Pull; Financial Innovation; JOBS Act
* Corresponding author. Tel.: [phone].
E-mail address:
[e-mail]
© 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license 
(
http://creativecommons.org/licenses/by-nc-nd/4.0/
).
Peer-review under responsibility of Istanbul Univeristy.

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 Semen Son Turan / Procedia - Social and Behavioral Sciences 195 ( 2015 ) 353 – 362