Abstract
The use of crowd-based online technology for raising funds is gaining popularity and credibility. This paper seeks to provide a better understanding of the effects of formal and informal institutions on the success of a crowdfunding project. It also analyzes how the effects of different types of institutions are likely to vary across the four different types of crowdfunding projects: (1) crowdlending, (2) crowdequity, (3) reward-based crowdfunding and (4) donation-based crowdfunding. A practical implication of this work is that the ease with which entrepreneurs and other types of fundraisers can raise money via crowdfunding platforms to fund a project depends upon the nature of formal and informal institutions in the economy. A theory of crowdfunding is proposed that explains these developing relationships.
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