Market imperfections and crowdfunding

  • Anton Miglo
  • Victor Miglo


This article is the first one that considers the choice between the different types of crowdfunding and traditional financing under different types of market imperfections. In contrast to most existing literature, we focus on financial aspects of crowdfunding rather than on price discrimination between customers using a new approach on the demand side. The model provides several implications, most of which have not yet been tested. For example, we find that when asymmetric information is important, high-quality projects prefer reward-based crowdfunding. A low-quality firm may find it unprofitable to mimick this strategy as it will be taking more risk to achieve a threshold. This result is contradictory to the spirit of the results in Belleflamme et al. (Journal of Business Venturing: Entrepreneurship, Entrepreneurial Finance, Innovation and Regional Development, 29(5), 585–609, 2014), which finds that asymmetric information favours equity-based crowdfunding. In contrast to Belleflamme et al. (Journal of Business Venturing: Entrepreneurship, Entrepreneurial Finance, Innovation and Regional Development, 29(5), 585–609, 2014), in our model, crowdfunding does not have any ad-hoc non-monetary benefits.


Crowdfunding Asymmetric information Moral hazard Equity-based crowdfunding Reward-based crowdfunding 

JEL Classification

D82 G32 L11 L26 M13 



We are grateful to the SBEJ Editor and two anonymous referees for the very helpful comments. Also, many thanks to Peter Klein, Eleni Papagiannaki, Simona Mateut, Kevin Amess, Jason Pavunkovic, Kory Lippert, Alia Raza, Shane Smith, Michael Kidd, Jamie Grasman, Jonathon Dean, Melissa Toner, Erin Clark, the seminar participants at de Montfort University, Royal Economic Society 2018 and British Association of Finance and Accounting 2018 annual conferences, and all the participants of the numerous discussions on crowdfunding organized by website for their comments.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Birmingham City UniversityBirminghamUK
  2. 2.University of TorontoTorontoCanada

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