Real Effects of Lending-Based Crowdfunding Platforms on the SMEs

37 Pages Posted: 23 Dec 2020

See all articles by Olena Havrylchyk

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris; Université Paris Ouest - Nanterre, La Défense - EconomiX

Aref Mahdavi Ardekani

University of Paris 1 Pantheon-Sorbonne, CES; Université de Limoges, LAPE

Date Written: August 21, 2020

Abstract

This paper explores the short-term impact of borrowing via lending-based crowdfunding on performance and health of small and medium enterprises (SMEs) in France. We find that firms borrowing from lending-based crowdfunding platforms are more dynamic (higher asset growth and higher profitability) and innovative, but they have lower leverage, less cash, higher funding costs and less tangible assets that could be pledged as a collateral. To account for this selection bias, we construct three control groups by using Propensity Score Matching, Mahalanobis Distance Matching and Coarsened Exact Matching methods and then run difference-in- difference regressions. We find that borrowing via lending-based crowdfunding platforms increases SMEs’ leverage and interest rate burden in the short-term, but these impacts disappear after two years. We observe asset growth during the year of borrowing, but no impact on sales growth, investment, employment or profitability.

Keywords: lending-based crowdfunding, firm financing, firm performance, informational asymmetry

JEL Classification: G21, G23, G31, G32

Suggested Citation

Havrylchyk, Olena and Mahdavi Ardekani, Aref, Real Effects of Lending-Based Crowdfunding Platforms on the SMEs (August 21, 2020). Available at SSRN: https://ssrn.com/abstract=3717170 or http://dx.doi.org/10.2139/ssrn.3717170

Olena Havrylchyk

CEPII, Centre d'Etudes Prospectives et d'Info. Internationales, Paris ( email )

113 rue de Grenelle
Paris, F-75007
France

Université Paris Ouest - Nanterre, La Défense - EconomiX ( email )

200 Avenue de la République
Nanterre cedex, Nanterre Cedex 92000
France

Aref Mahdavi Ardekani (Contact Author)

University of Paris 1 Pantheon-Sorbonne, CES ( email )

106-112 Boulevard de l'hopital
106-112 Boulevard de l'Hôpital
Paris Cedex 13, 75647
France

Université de Limoges, LAPE

5 rue Félix Eboué BP3127
LIMOGES, 87031
France

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