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Business or basic needs ?The impact of loan purpose on social crowdfunding platforms

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  • Hadar Gafni
  • Marek Hudon
  • Anaïs A Périlleux

Abstract

Crowdfunding has created new opportunities for poor microentrepreneurs. One crucial question is the impact that the purpose of a loan—either business investment or basic necessities—may have on the success of a campaign. Investigating a prosocial crowdfunding platform, we find that loans taken out to meet basic needs are funded faster than business-related loans, especially for small amounts, which can be explained by the prosocial motivation of microlenders. Moreover, female microborrowers are funded faster than men, especially for basic needs loans. Our results therefore suggest an ethical blind spot, since prosocially motivated crowdlenders may unintentionally end up producing adverse effects, replicating gender role by supporting women to a lesser extent when they apply for business loans. This finding expands prosocial motivational theory in ethical finance.

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  • Hadar Gafni & Marek Hudon & Anaïs A Périlleux, 2020. "Business or basic needs ?The impact of loan purpose on social crowdfunding platforms," Working Papers CEB 20-008, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/305142
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    More about this item

    Keywords

    crowdfunding; business loans; basic necessities; ethical finance; microfinance; microlending; gender preference;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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