Luo Xuechen: Crowdfunding Platform Financing and the Development of Inclusive Financial Institutions: New Hope?


  As an emerging financing channel, online crowdfunding platforms are expected to increase social participation, increase financing opportunities for grassroots entrepreneurs and micro enterprises, as well as those who find it difficult to obtain funds from traditional financial markets or projects, and enhance financial inclusivity. However, due to the lack of empirical evidence, the ability of crowdfunding platforms to fulfill this promise is widely questioned.

  By combining data from the public welfare crowdfunding platform and the micro credit institution data platform MIX Market, our distinguished researcher Dr. Luo Xuechen and collaborators are jointly committed to studying the impact of the use of public welfare crowdfunding platforms on the operational performance of traditional inclusive finance micro credit institutions. The study uses methods such as the difference in differences (DID) model, sensitivity score matching (PSM), tree based approach, and Heckman selection model to conduct empirical analysis, exploring how crowdfunding platform financing affects the sustainability and interest rates of microcredit institutions.

  The empirical results show that after joining the Kiva platform, microfinance institutions have improved their operational sustainability and significantly reduced interest rates. Further analysis indicates that these changes in microcredit institutions are mainly due to improved operational efficiency, rather than an increase in low-cost funding supply. Joining crowdfunding platforms can improve information transparency and public supervision, thereby incentivizing small credit institutions to improve their operational models and improve efficiency.

  This study demonstrates the positive impact of online crowdfunding platforms on the operation of inclusive finance small loan institutions that use platform financing, and explores their mechanisms of action, providing empirical evidence for the role of online crowdfunding platforms at the organizational level, thus enriching research in the fields of Crowdfunding, IT Impact (IT4D), and Microfinance. The conclusion of this study will provide important reference value for improving the operational efficiency of inclusive finance small loan institutions and for formulating information disclosure mechanisms and regulatory policies for online crowdfunding platforms.


Xuechen Luo, Ling Ge, and Chong (Alex) Wang. 2022. Crowdfunding for Microfinance Institutions: The New Hope?, MIS Quarterly (46:1), pp. 373-400.

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