with Ali Mohammadi (CBS), Anders Broström (KTH) and Kourosh Shafi (CalState)
Abstract: What has boosted crowdfunding’s growth? In the case of peer-to-peer (P2P) lending, we highlight the role of consumers’ distrust in banks. We offer evidence that distrust in banks likely triggers individuals to supply funding toward crowdfunding and away from bank deposits. We highlight that a distrust mindset promotes questioning default choices and considering alternatives, and fosters comparisons focusing on dissimilarities. Our findings suggest US states whose residents express greater distrust in banks are more likely to fund P2P loans and, conditional on funding, lend higher amounts. This relationship is more pronounced when funding small loans or borrowers with less banking access.
Abstract: A vast digital ecosystem of entrepreneurship and exchange has sprung up with Bitcoin’s digital infrastructure at its core. We explore the worldwide spread of infrastructure necessary to maintain and grow Bitcoin as a system (Bitcoin nodes) and infrastructure enabling the use of bitcoins for everyday economic transactions (Bitcoin merchants). Specifically, we investigate the role of legal, criminal, financial, and social determinants of the adoption of Bitcoin infrastructure. We offer some support for the view that the adoption of cryptocurrency infrastructure is driven by perceived failings of traditional financial systems, in that the spread of Bitcoin infrastructure is associated with low trust in banks and the financial system among inhabitants of a region, and with the occurrence of country-level inflation crises. On the other hand, our findings also suggest that active support for Bitcoin is higher in locations with well-developed banking services. Finally, we find support for the view that bitcoin adoption is also partly driven by cryptocurrencies’ usefulness in engaging in illicit trade.
Are Constraints the Mother of Innovation? Investment and Innovation Effects of the Global Financial Crisis
Abstract: I investigate effects of funding rejections on firm investments, innovation activity and performance, through matching successful and observably-similar unsuccessful capital-seeking SMEs. This approach to disentangling supply-side from demand-side forces by exploiting realized application outcomes is novel and robust to substitution between sources of capital. I find evidence of firms’ tangible and intangible investments being hampered due to inability to access capital in the crisis. Patenting firms decrease intangible investments after the crisis, and financial constraints reduce firm intangibility. Surprisingly, the quality of patenting increased for financially constrained firms after the crisis. The mechanism seems to be that financially constrained firms revisit and exploit in-house R&D better in the face of systemic crises and perceptions of financial, organizational, and human capital constraints. Reduced investment plans following rejection are a primary channel through which firm performance is lowered, and the effects are amplified for innovative firms. Results imply that while the financial crisis harmed investments, it spurred affected firms to harness intangible resources better.
Presented at: SMS 2022; Druid 2022; SSE 2021; AOM Annual Meeting 2020; KTH
To be presented at: AOM Annual Meeting 2022 & AOM STR PDW 2022 (Seattle); SMS Annual Meeting 2022 (London)
Presented at: AOM Annual Meeting 2021 (Online), SMS Annual Meeting 2021 (Online); SMS 2021 PDW; DRUID Conference 2021 (CBS)
Presented at: AOM Annual Meeting 2021