Law, Trust, and the Development of Crowdfunding

Using a unique hand-collected sample of crowdfunding volume obtained by surveying over 3,000 crowdfunding platforms worldwide, I document the global patterns and determinants of crowdfunding, an innovative form of financing that has grown faster than any other financial innovation in the recent past. Crowdfunding volume within a country appears to be driven by rational economic reasons. The rule of law, quality of regulation, control of corruption, ease of entry, and financial profitability of extant intermediaries are all significantly positively related to the volume of crowdfunding. I find little evidence that trust, adventure-seeking, or other social factors matter.