Law, Trust, and the Development of Crowdfunding
70 Pages Posted: 20 Jun 2017 Last revised: 17 Jul 2019
Date Written: May 31, 2019
Using a unique hand-collected sample of crowdfunding volume obtained by surveying over 3,000 crowdfunding platforms worldwide, I document the global patterns and determinants of crowdfunding, an innovative form of financing that has grown faster than any other financial innovation in the recent past. Crowdfunding volume within a country appears to be driven by rational economic reasons. The rule of law, quality of regulation, control of corruption, ease of entry, and financial profitability of extant intermediaries are all significantly positively related to the volume of crowdfunding. I find little evidence that trust, adventure-seeking, or other social factors matter.
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
Suggested Citation: Suggested Citation