Financial Literacy and Security-based Crowdfunding

Security-based crowdfunding has recently emerged as a novel market that allows small investors to engage directly in financing entrepreneurial ventures. However, a certain level of financial literacy is required to understand and manage these digital finance tools. A better understanding of the impact of financial literacy is therefore central to the development of these markets and the achievement of their inclusive potential. Using data on the population of 432 investment crowdfunding platforms in 37 OECD countries between 2007 and 2019, we find higher platforms' survival profiles where the level of financial literacy is higher. Financial literacy, however, needs to combine with specific platform characteristics to take full effect, as it matters more for those platforms that deliver voting rights and for those that provide poorer value-added services to crowdfunding investors