Law, Trust, and the Development of Crowdfunding

Abstract

Using a unique hand-collected sample of crowdfunding volume obtained by surveying over 2,200 crowdfunding platforms worldwide, I show that the introduction of explicit legal regulation appears to significantly increase crowdfunding volume. The effect appears to be at least partly causal. Crowdfunding volume is at best weakly related to social factors such as the country level of generalized trust.

Keywords: Industrial Organization, Alternative finance, Distributed finance, Crowdsourcing, Crowdfunding, Law and finance, Peer-to-Peer, P2P lending, Equity crowdfunding, Social Finance

JEL Classification: G21, G23