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Mitigating local bias in equity crowdfunding: a financial ecology perspective

Author

Listed:
  • Wanxiang Cai
  • Friedemann Polzin
  • Erik Stam

Abstract

This study analyses the relationship between geographic space, social networks, and financial knowledge in interregional equity crowdfunding flows based on the concept of financial ecology. Using data from a leading Dutch equity crowdfunding platform, we find that interregional crowdfunding investment decreases with geographic distance. Furthermore, the negative effect of distance is weaker if interregional social networks are strong and if the investor region has a high concentration of the financial industry. The results extend the conceptual foundation of financial ecology by explaining how individual behaviors affect the macro-level output of a financial ecology.

Suggested Citation

  • Wanxiang Cai & Friedemann Polzin & Erik Stam, 2024. "Mitigating local bias in equity crowdfunding: a financial ecology perspective," Journal of Economic Geography, Oxford University Press, vol. 24(4), pages 549-565.
  • Handle: RePEc:oup:jecgeo:v:24:y:2024:i:4:p:549-565.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbae009
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    More about this item

    Keywords

    financial ecology; equity crowdfunding; local bias; social networks; financial knowledge;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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