Promoting SME Finance in the Context of Fintech Revolution: A Case Study of the UK's Practice and Regulation

Lerong Lu

Research output: Contribution to journalArticle (Academic Journal)peer-review

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Small and medium-sized enterprises (SMEs) play a significant role in most European economies. In the UK, SMEs account for 99.9% of the total business population, 60% of the private sector employment, as well as 50% of the national GDP. However, they merely receive 17% of total business loans from the banking industry, whilst 83% of loans go to large corporations, since banks have become risk-averse after the global financial crisis. Meanwhile, the UK has witnessed a so-called financial technology (fintech) revolution in recent years, with the emergence of an alternative finance market channelling billions of pounds to SMEs annually. Arguably, fintech and alternative finance could possibly solve the long-term SME financing dilemma. Against this backdrop, this paper discusses and analyses the online peer-to-peer (P2P) lending market and digital-based challenger banks in the UK, explaining how alternative finance has been bridging the SME financing gap. Moreover, it also assesses the UK’s policies and regulatory framework over the burgeoning alternative finance market.
Original languageEnglish
Pages (from-to)317-343
JournalBanking and Finance Law Review
Publication statusPublished - 24 Mar 2018


  • SME finance
  • financial technology
  • fintech
  • alternative finance
  • P2P lending
  • challenger bank
  • financial regulation


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