Crowdfunding: disintermediated investment banking

Brian J Rubinton

MPRA Paper from University Library of Munich, Germany

Abstract: This paper introduces crowdfunding as a concept and model for the evolution of investment banking. Crowdfunding, an application of crowdsourcing, is defined as one party’s attempt to finance a project by offering three types of investment opportunities to potential investors. The investment opportunities are donations, passive investments, and active investments. From this foundation I develop a model in which interdependent agents operate in a dynamic, discrete setting. Potential investors decide whether or not to invest in one of three opportunities each period while the entrepreneur sets the parameters of the game to maximize the probability of successful financing. I then simulate the model to analyze the effects changes in key parameters have on the results of the game.

Keywords: crowdfunding; crowdsourcing; network; finance; banking; relationship; evolution; investment; commercial; customer; participation (search for similar items in EconPapers)
JEL-codes: G24 G32 L26 O30 P34 (search for similar items in EconPapers)
Date: 2011-04-11
New Economics Papers: this item is included in nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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