Abstract

http://ssrn.com/abstract=2219546
 
 

References (26)



 
 

Citations (3)



 


 



Home Bias in Online Investments: An Empirical Study of an Online Crowdfunding Market


Mingfeng Lin


University of Arizona - Eller College of Management

Siva Viswanathan


University of Maryland - Robert H. Smith School of Business

January 26, 2014


Abstract:     
An extensive literature in economics and finance has documented “home bias,” the tendency that transactions are more likely to occur between parties in the same geographical area, rather than outside. Using data from a large online crowdfunding marketplace and employing a quasi-experimental design, we find evidence that home bias still exists in this virtual marketplace for financial products. More importantly, we find that economic reasons do not fully explain home bias, and that emotions toward one’s home state play an important role. Empirical support for this come from the observations that investors often forgo strictly better alternatives (lower risk and higher return) when investing in home state borrowers; that home state loans offer lower financial returns; and that loan requests with more geography-related words are more likely to attract same state bids. As crowdfunding becomes an alternative and appealing channel for financing, a better understanding of home bias in this new context provides important managerial, practical, and policy implications.

Number of Pages in PDF File: 36

Keywords: home bias; peer-to-peer lending; quasi-experiment; crowdfunding; emotion

working papers series


Download This Paper

Date posted: February 18, 2013 ; Last revised: January 28, 2014

Suggested Citation

Lin, Mingfeng and Viswanathan, Siva, Home Bias in Online Investments: An Empirical Study of an Online Crowdfunding Market (January 26, 2014). Available at SSRN: http://ssrn.com/abstract=2219546 or http://dx.doi.org/10.2139/ssrn.2219546

Contact Information

Mingfeng Lin (Contact Author)
University of Arizona - Eller College of Management ( email )
Tucson, AZ 85721
United States
Siva Viswanathan
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,255
Downloads: 505
Download Rank: 29,842
References:  26
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.328 seconds