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Developing a Framework of Equity Crowdfunding for Small and Medium Enterprises (SMEs) in Malaysia: A Conceptual Paper

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  • Nor Khadijah Mohd Azhari

    (Universiti Teknologi Mara, Cawangan Pulau Pinang, Malaysia)

  • Radziah Mahmud

    (Universiti Teknologi Mara, Cawangan Pulau Pinang, Malaysia)

  • Noor Ashikin Basarudin

    (Universiti Teknologi Mara, Cawangan Pulau Pinang, Malaysia)

Abstract

The Covid-19 pandemic has affected the global economic turmoil leading to the global recession around the world. This will adversely affect Malaysia’s small and medium enterprises (SMEs) sustainability. Companies with less than three years of operations face various challenges tapping into funding facilities as banks will prioritise existing customers with good track records. An alternative avenue for funding and financing is necessary to survive in the business. To gain holistic understanding of the ECF, this study has four objectives: (1) To uncover the roles of ECF to SMEs in the time of crisis; (2) To investigate the crucial influencing factors to success the crowdfunding campaigns; (3) To explore the roles of regulation to protect investor and issuers in equity crowdfunding; (4) To develop a framework for fundraisers to ensure their successful campaign. This study will employ a mixed-method approach to achieve the objectives. The interview will be conducted with registered ECF operators, and the questionnaire will be distributed to ECF fundraisers. Since different data sources will be used, the data preparation is divided into web scrapping and text extraction. Python programming language and scrapper library, known as Beautiful Soup, will used to obtain the company’s details, while text extraction will be performed on the pdf files. Therefore, Python library known as PyPDF2 will be used to extract data from PDF files. It is hoped that the findings and proposed framework can assist the government and policymakers in enhancing successful applicant campaigns and improving the investors’ protection legal framework. Along with the national agenda, namely Sustainability Development Goal (SDG) 8 and the Strategic Thrust 1 of the Shared Prosperity Vision 2030, successful SMEs are vital as they can create jobs opportunity for the local community and foster economic growth through more and large pool of investments.

Suggested Citation

  • Nor Khadijah Mohd Azhari & Radziah Mahmud & Noor Ashikin Basarudin, 2024. "Developing a Framework of Equity Crowdfunding for Small and Medium Enterprises (SMEs) in Malaysia: A Conceptual Paper," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(10), pages 1635-1642, October.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:10:p:1635-1642
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    References listed on IDEAS

    as
    1. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    2. Antonella Francesca Cicchiello & Francesca Battaglia & Stefano Monferrà, 2019. "Crowdfunding tax incentives in Europe: a comparative analysis," The European Journal of Finance, Taylor & Francis Journals, vol. 25(18), pages 1856-1882, December.
    3. John Donovan, 2021. "Financial Reporting and Entrepreneurial Finance: Evidence from Equity Crowdfunding," Management Science, INFORMS, vol. 67(11), pages 7214-7237, November.
    4. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
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    6. Rubinton, Brian J, 2011. "Crowdfunding: disintermediated investment banking," MPRA Paper 31649, University Library of Munich, Germany.
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    8. Lars Hornuf & Armin Schwienbacher, 2017. "Should securities regulation promote equity crowdfunding?," Small Business Economics, Springer, vol. 49(3), pages 579-593, October.
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