Abstract
Bank instability may induce borrowers to use crowdfunding as a source of external finance. A range of stress indicators help identify banks with potential credit supply constraints, which then can be linked to a unique, manually constructed sample of 157 new ventures seeking equity crowdfunding, for comparison with 200 ventures that do not use crowdfunding. The sample comprises projects from all major German equity crowdfunding platforms since 2011, augmented with controls for venture, manager, and bank characteristics. Crowdfunding is significantly more likely for new ventures that interact with stressed banks. Innovative funding sources are thus particularly relevant in times of stress among conventional financiers. But crowdfunded ventures are generally also more opaque and risky than new ventures that do not use crowdfunding.
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Notes
- 1.
Recent policy (e.g., De Buysere et al. 2014), and academic (e.g., Mollick 2014; Schwienbacher 2013; Hornuf and Schwienbacher 2014), light on the potential role of crowdfunding and vividly illustrate the broadening interest in this new form of financing ventures. We instead seek to provide empirical evidence about the causal effects of bank credit crunches.
- 2.
We also tested the robustness of all reported results towards using a linear probability model using OLS, which confirms all reported results.
- 3.
Alternative treatments of the outliers, such as winsorizing, did not alter our results qualitatively.
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Blaseg, D., Koetter, M. (2016). Crowdfunding and Bank Stress. In: Tasca, P., Aste, T., Pelizzon, L., Perony, N. (eds) Banking Beyond Banks and Money. New Economic Windows. Springer, Cham. https://doi.org/10.1007/978-3-319-42448-4_3
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