Applicability and Readiness of Crowdfunding in Turkey

Abstract

This paper discusses the applicability and readiness of crowdfunding in Turkey. Crowdfunding is an alternative financing option for entrepreneurs or businesses via deploying Internet based tools to collect funds from public or multiple individuals in the form of either donations or investments. In Turkey, since capital markets are not well developed, banks are the dominant financial institutions and raising money via capital market instruments is not pervasive. Therefore, alternative fund raising methods are needed for starters. This paper analyses the current conditions for crowdfunding as an alternative financing method in terms of entrepreneurial culture, economic regulation, community engagement and technology. The paper also proposes some policies for potential crowdfunding applications in Turkey. Preliminary findings of this research indicate that as a new financing method, within the framework of requisite regulations, crowdfunding can be successfully implemented in Turkey. However, Turkey is not ready for this alternative financing method from the perspectives of community engagement, entrepreneurial culture and current regulations.

Keywords: Crowdfunding, Alternative Financing, Turkish Financial Markets, Financial Regulation

JEL Classification: K22, G32, L26