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Sometimes, Always, Never: Regulatory Clarity and the Development of Digital Financing

Author

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  • Zhenkai Ran

    (University of Cambridge, Cambridge CB2 1AG, United Kingdom)

  • P. Raghavendra Rau

    (University of Cambridge, Cambridge CB2 1AG, United Kingdom)

  • Tania Ziegler

    (University of Cambridge, Cambridge CB2 1AG, United Kingdom)

Abstract

This study examines how the level of detail in legal regulations impacts crowdfunding. We find that clear, explicit regulations significantly boost crowdfunding volumes in a global sample of digital finance. Using proxies to measure regulatory detail in three types of countries—countries that sometimes, always, or never had regulation—in a series of difference-in-difference regressions, we show a significant positive relation between regulatory clarity and the level of debt crowdfunding. There is little effect on the level of equity crowdfunding. Clear regulations appear to encourage the creation of new crowdfunding platforms rather than concentrating activity in existing ones.

Suggested Citation

  • Zhenkai Ran & P. Raghavendra Rau & Tania Ziegler, 2025. "Sometimes, Always, Never: Regulatory Clarity and the Development of Digital Financing," Management Science, INFORMS, vol. 71(9), pages 8027-8071, September.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:9:p:8027-8071
    DOI: 10.1287/mnsc.2023.01538
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