Seminar – Law, Trust, and the Development of Crowdfunding

Professor Raghavendra Rau, Cambridge Judge Business School

Professor Rau will analyse the economic determinants of crowdsourced finance models using a unique hand-collected sample of crowdfunding volume obtained by surveying over 1,300 crowdsourcing platforms in 2015. On the supply side, the quality of the legal system, the level of rents earned by extant intermediaries, and the barriers to entry to formal businesses positively affect volume on crowdfunding platforms. On the demand side, access to the financial system, the sophistication of the user base, and the level of trust individuals have for strangers, all positively affect the volume of crowdfunding. Trust is the only factor that appears consistently significant in explaining the volume on reward- or donation-based platforms.

Speaker bio

Professor Raghavendra Rau is also a past president of the European Finance Association, Head of the Finance & Accounting subject group at Cambridge Judge, Director (Research) of the Cambridge Centre for Alternative Finance (CCAF) and a member of the Cambridge Corporate Governance Network (CCGN).