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Overcharged or fair play? Exploring interest rates and profitability in debt-based crowdfunding

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  • Ghasemi, Ehsan
  • Vafai, Nima
  • Sheikh-Zadeh, Alireza

Abstract

•The key insight of this study is that risk-controlled profitability scoring in debt-based crowdfunding can promote fairer loan pricing and funding opportunities for entrepreneurs.•Interest rates assigned to high-risk loans exceed compensation for their default probability.•High-probability-of-default borrowers offer higher profitability than low-risk ones.•Risk-controlled profitability models outperform probability-of-default-based models.•New profitability predictors independent of risk predictors were identified.

Suggested Citation

  • Ghasemi, Ehsan & Vafai, Nima & Sheikh-Zadeh, Alireza, 2024. "Overcharged or fair play? Exploring interest rates and profitability in debt-based crowdfunding," Journal of Business Venturing Insights, Elsevier, vol. 22(C).
    • Handle: RePEc:eee:jobuve:v:22:y:2024:i:c:s235267342400060x
    DOI: 10.1016/j.jbvi.2024.e00508
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