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The Exemption Provisions of the German Retail Investor Protection Act

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Listed:
  • Christa Hainz
  • Lars Hornuf
  • Lars Klöhn
  • Björn Brauer
  • Felix Ehrenfried
  • Gerrit Engelmann

Abstract

This article examines the effects of the exemption provisions of the Retail Investor Protection Law introduced in summer 2015. Through stronger regulation, the German Retail Investor Protection Act is intended to provide more transparency for investors on the gray capital market. However, the law also contains exemption. These release both companies that finance themselves through a crowd-investing platform as well as social, charitable and religious projects from the obligation of producing a prospectus for the financing of asset investments. The basis for the article’s research on these exceptions is the crowd-investing database, a survey among social and non-profit organisations as well as consultation of experts. About one year after the introduction of the German Retail Investor Protection Law, it can be concluded there are no strong effects on the market for crowd financing in Germany. The analysed data also show that investment behaviour has not changed as a result of the newly introduced obligation to self-report on the income and assets of investors.

Suggested Citation

  • Christa Hainz & Lars Hornuf & Lars Klöhn & Björn Brauer & Felix Ehrenfried & Gerrit Engelmann, 2017. "The Exemption Provisions of the German Retail Investor Protection Act," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(06), pages 26-35, March.
    • Handle: RePEc:ces:ifosdt:v:70:y:2017:i:06:p:26-35
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    File URL: https://www.ifo.de/DocDL/sd-2017-hainz-etal-kleinanlegerschutzgesetz-2017.pdf
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    References listed on IDEAS

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    1. Robert E. Carpenter & Bruce C. Petersen, 2002. "Is The Growth Of Small Firms Constrained By Internal Finance?," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 298-309, May.
    2. Christa Hainz & Lars Hornuf & Lars Klöhn & Björn Brauer & Felix Ehrenfried & Gerrit Engelmann, 2017. "Praxiserfahrungen mit den Befreiungsvorschriften des Kleinanlegerschutzgesetzes," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 78.
    3. Lars Hornuf & Matthias Schmitt, 2016. "Success and Failure in Equity Crowdfunding," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(2), pages 16-22, 07.
    4. Gregor Dorfleitner & Lars Hornuf & Matthias Schmitt & Martina Weber, 2017. "FinTech in Germany," Springer Books, Springer, number 978-3-319-54666-7, September.
    5. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, vol. 19(2), pages 261-283, March.
    6. Lars Hornuf & Matthias Neuenkirch, 2017. "Pricing shares in equity crowdfunding," Small Business Economics, Springer, vol. 48(4), pages 795-811, April.
    7. Lars Hornuf & Armin Schwienbacher, 2017. "Should securities regulation promote equity crowdfunding?," Small Business Economics, Springer, vol. 49(3), pages 579-593, October.
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    Cited by:

    1. Christa Hainz & Lars Hornuf & Lisa Nagel & Sarah Reiter & Eliza Stenzhorn, 2019. "Exemption Provisions of the German Small Investor Protection Act: A Follow-up Study," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(02), pages 41-51, August.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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