Investor Learning in Crowdfunded Supply Chain Finance Markets

32 Pages Posted: 8 Mar 2018 Last revised: 27 Nov 2023

See all articles by Zhijin Zhou

Zhijin Zhou

University of Washington - Michael G. Foster School of Business

Yi-Chun (Chad) Ho

George Washington University - School of Business

Shengsheng Xiao

Shanghai University of Finance and Economics

Yong Tan

University of Washington - Michael G. Foster School of Business

Mingrui Zhang

University of Washington, Michael G. Foster School of Business, Students

Date Written: November 19, 2023

Abstract

Crowdfunded Supply Chain Finance (SCF) is an innovative market design that transforms financial flows, allowing individual investors to serve as funders under the SCF paradigm. Required by the crowdfunded SCF platform, the involvement of loan guarantors in the financing process alters how fundraisers and investors interact with each other, potentially giving rise to the behavior of investor learning. In this study, we develop a Bayesian learning model, wherein we conceptualize individual perception of guarantor reliability as a subjective attitude underlying the perceived risk of a loan listing. We consider that individual investors can learn about a guarantor’s reliability as they have more interactions with the same guarantor over time. We model investor decision-making as a process involving two separate yet interdependent stages: (1) the incidence decision of whether to invest and (2) the amount decision of how much to invest. Our results show that investors’ decision-making is governed by their perceptions of guarantor reliability, despite in two distinctive manners. Whereas the perceived guarantor reliability is found to have a monotonic, positive effect on amount decisions, its impact on incidence decisions is best described by a curvilinear (inverted U-shaped) relationship. Our results also show that perceived guarantor reliability moderates the positive main effect of interest rates on both decisions, implying that the effectiveness of promising greater returns to induce more funding diminishes as the reliability perception rises. A posterior analysis reveals that offering high interest rates will turn counterproductive when perceived guarantor reliability is high. Implications for platform managers are discussed.

Keywords: FinTech, supply chain finance, crowdfunding, platform design, learning models, Bayesian estimation

Suggested Citation

Zhou, Zhijin and Ho, Yi-Chun (Chad) and Xiao, Shengsheng and Tan, Yong and Zhang, Mingrui, Investor Learning in Crowdfunded Supply Chain Finance Markets (November 19, 2023). Available at SSRN: https://ssrn.com/abstract=3136240 or http://dx.doi.org/10.2139/ssrn.3136240

Zhijin Zhou

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Yi-Chun (Chad) Ho

George Washington University - School of Business ( email )

Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/chad-ho

Shengsheng Xiao (Contact Author)

Shanghai University of Finance and Economics ( email )

No. 100 Wudong Road
Shanghai, Shanghai 200433
China

Yong Tan

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3226
United States

Mingrui Zhang

University of Washington, Michael G. Foster School of Business, Students ( email )

Box 353200
Seattle, WA 98195-3200
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
495
Abstract Views
2,732
Rank
99,303
PlumX Metrics