Financial Literacy and Security-based Crowdfunding

Seminar abstract

 Research Question/Issue:

This study investigates the relationship between financial literacy and the survival profile of the security-based crowdfunding platforms. Security-based crowdfunding has recently emerged as a novel market that allows small investors to engage directly in financing entrepreneurial ventures. However, a certain level of financial literacy is required to understand and manage these digital finance tools. A better understanding of the impact of financial literacy is, therefore, central to the development of these markets and the achievement of their inclusive potential.

Research Findings/Insights:

Using data of the universe of 432 security-based crowdfunding platforms in 37 OECD countries from 2007 to 2019, we find higher platforms' survival profiles where the level of financial literacy is high. Financial literacy, however, needs to combine with specific platform characteristics to take full effect, as it matters more to those platforms that deliver voting rights and that provide poorer value-added services to crowdfunding investors.

Theoretical/Academic Implications:

This study provides empirical support to the role of governance mechanisms at the platform level for differences in the level of financial literacy across countries. As such, it contributes to literature both on financial literacy and corporate governance. Additionally, it extends previous research in crowdfunding to the platform level.

Practitioner/Policy Implications:

This study calls for the attention of policymakers interested in the development of crowdfunding markets. The importance of financial literacy varies with the presence of governance mechanisms and information production at the platform-level.

Booking

This seminar is free to attend.

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Speaker bio

Silvio Vismara is Professor of Entrepreneurial Finance at the University of Bergamo, Italy.

He is co-founder of the CCSE research centre with the University of Augsburg, Germany. 

His research on IPOs and crowdfunding has been covered by The Economist, Financial Times, and Investors Chronicle.

His research has been published in international journals, such as the Journal of Corporate Finance, the Journal of Banking and Finance, Financial Management, Small Business Economics etc.

He has been the guest editor of special issues in various academic journals.

He established an academic spinoff (Universoft) in 2004 and currently serves as scientific consultant for the Italian Stock Exchange.