Third-Party Signals in Crowdfunded Microfinance: The Role of Microfinance Institutions
Aaron H. Anglin,
Jeremy C. Short,
David J. Ketchen,
Thomas H. Allison and
Aaron F. McKenny
Entrepreneurship Theory and Practice, 2020, vol. 44, issue 4, 623-644
Crowdfunded microfinance research has routinely examined how campaign characteristics drive funding to crowdfunding campaigns but has neglected to examine the critical role of the microfinance institution (MFI). We leverage signaling theory to contend that entrepreneursâ€™ MFI affiliation is a salient third-party signal that shapes the performance of their crowdfunding campaign and examine how the financial and social performance of MFIs drive campaign funding. Our examination of 220,649 loans paired 173 MFIs supports our arguments. We provide insight into the importance of third-party signals in crowdfunding and into how investors seek to balance social motives with financial concerns in crowdfunded microfinance.
Keywords: microfinance; crowdfunding; signaling theory (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:44:y:2020:i:4:p:623-644
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