Law, Trust, and the Development of Crowdfunding
67 Pages Posted: 20 Jun 2017 Last revised: 6 Aug 2018
Date Written: August 1, 2018
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 all determine the volume of crowdfunding. I find little evidence that trust, adventure-seeking, or other social factors matter.
Keywords: 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