Abstract

Crowdfunding creates new opportunities of fundraising for fund seekers who are underserved in the traditional financial market. However, there could be potential issue of discrimination as funders can freely choose their choice of projects. We study whether the racial/ethnic discrimination exists in crowdfunding and how it may affect the projects fundraising outcomes. Using data from the largest prosocial lending crowdfunding platform, Kiva, we find that there is no significant difference in the chance of getting funded for minority loans and White loans. However, we do identify that loans to African American have averagely smaller contribution per funder, implying certain degree of risk aversion from such loans, a sign of discrimination. In addition, the percentage of US funders for African American loans is lower than other loans, suggesting even deeper discrimination from US funders.

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