Financial Literacy in Japan’s Lending-Based Crowdfunding: The Role of Peripheral and Diagnostic Signals

In this study, we empirically examine the determinants of fundraising success in Japan’s lending-based crowdfunding (LBCF), with a focus on the financial literacy of investors. Using 465 campaigns on the LBCF platform “Bankers” (December 2020–September 2024), we test two predictions derived from the lack of financial literacy hypothesis: (H1) investors are influenced by peripheral signals; (H2) diagnostic signals are not properly evaluated. Both are rejected. In cross-sectional tests, peripheral cues such as “Perks” are negatively associated with success, and the effects of “Title length” and “Purple highlighted text” observed in simpler models vanish when analyzed jointly. By contrast, diagnostic information is consistently informative: “Domestic campaign” and “Co-investment” are positive, while “Investment term” is negative; “Investment capital” is also negative, contrary to prior expectations. The results are robust to controls for the campaign sector and to alternative specifications (probit; OLS on achievement rate). Overall, investors in Japan’s LBCF appear to rely on diagnostic rather than peripheral signals, indicating financially literate, rational decision-making.