Mitigating local bias in equity crowdfunding: a financial ecology perspective

Wanxiang Cai, Friedemann Polzin and Erik Stam

Journal of Economic Geography, 2024, vol. 24, issue 4, 549-565

Abstract: This study analyses the relationship between geographic space, social networks, and financial knowledge in interregional equity crowdfunding flows based on the concept of financial ecology. Using data from a leading Dutch equity crowdfunding platform, we find that interregional crowdfunding investment decreases with geographic distance. Furthermore, the negative effect of distance is weaker if interregional social networks are strong and if the investor region has a high concentration of the financial industry. The results extend the conceptual foundation of financial ecology by explaining how individual behaviors affect the macro-level output of a financial ecology.

Keywords: financial ecology; equity crowdfunding; local bias; social networks; financial knowledge (search for similar items in EconPapers)
JEL-codes: D83 G18 (search for similar items in EconPapers)
Date: 2024
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