Essays on FinTech

FinTech typically describes the application of novel technologies in the financial services sector. These technological innovations aim to compete with traditional financial technologies and improve user experience on a broad range of financial applications. Examples range from peer-to-peer investing services and new settlement procedures to the use of smartphones for mobile banking. Each chapter of this dissertation deals with one of these examples with the goal to draw conclusions for broader economic questions. In the first chapter, Crowdfunding and Demand Uncertainty, I analyze the potential of reward-based crowdfunding to elicit demand information and improve the screening of viable projects vis-à-vis traditional external financing. Crowdfunding allows entrepreneurs to sell claims on future products directly to consumers to finance their investments. At the same time, this peer-to-peer sale of claims generates demand information that benefits the screening process for viable projects. I provide a characterization of the profit-maximizing crowdfunding mechanism when an entrepreneur knows neither the number of consumers who positively value the product nor their reservation prices. Using mechanism design theory, I show that the entrepreneur can finance all viable projects by committing to prices that decrease as the number of pledgers increases. This pricing strategy grants ex-post information rents to consumers with high reservation prices. However, if these information rents are large, then the entrepreneur prefers fixed high prices that lead to underinvestment since consumers with low valuations never participate. The second chapter, Building Trust Takes Time: Limits to Arbitrage in Blockchain-Based Markets, is a joint project with Nikolaus Hautsch and Stefan Voigt. We analyze the potential implications of distributed ledger technologies, such as blockchain, for cross-market trading. Distributed ledgers replace trusted clearing counterparties and security depositories with time-consuming consensus protocols to record the transfer of ownership. We argue that this settlement latency exposes cross-market arbitrageurs to price risk and theoretically derive arbitrage bounds that increase with expected latency, latency uncertainty, volatility in the underlying asset, and arbitrageurs' risk aversion. We then use Bitcoin order book and network data to estimate arbitrage bounds of, on average, 121 basis points, which in fact explain 91% of the observed cross-market price differences in our sample period. Consistent with our theoretical framework, we also find that periods of high latency-implied price risk exhibit large price differences, while asset flows across exchanges chase arbitrage opportunities. Our main conclusion is that blockchain-based settlement introduces a non-trivial friction that impedes arbitrageurs' activity. The third chapter, Perceived Precautionary Savings Motives: Evidence from FinTech, is coauthored with Francesco D'Acunto, Thomas Rauter, and Michael Weber. We use data from a European FinTech banking app provider to study the consumption response to the introduction of a mobile overdraft facility. In addition, we use the banking app to elicit consumers' preferences, beliefs, and motives. We find that users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, users with a lot of deposits relative to their income react more than others but do not tap into negative deposits. We demonstrate that these results are not fully consistent with conventional models of financial constraints, buffer stock models, or present-bias preferences. We hence label this channel perceived precautionary savings motives: users with a lot of liquidity behave as if they had strong precautionary savings motives even though no observables, including the elicited preferences and beliefs, suggest they should

What is the economic value of culture? Essays on valuation of cultural activities and consumers preferences

Tese de doutoramento em EconomicsA cidade do Porto foi, em 2001, Capital Europeia da Cultura, tendo sido o embrião de várias atividades culturais acompanhadas por um forte investimento para a requalificação urbana e construção de novas infraestruturas. A Casa da Música e a paisagem resultante da requalificação da Cordoaria são os objetos desta tese. O método de valoração contingente, uma metodologia baseada em inquéritos, tem servido para eliciar preferências declaradas do consumidor relativamente a bens culturais. A investigação que tem vindo a ser desenvolvida utiliza métodos muito diversificados. Ainda assim, o desenho do questionário, para corrigir o enviesamento, para instituições culturais apresenta lacunas na literatura científica, sendo que em Portugal raramente foram desenvolvidos estudos para este objeto. Existem três objetivos específicos: i) desenvolvimento de um modelo de preferências do consumidor; ii) aplicação da economia experimental e comportamental na análise da presença de enviesamentos na eliciação do valor de atividades culturais; e, iii) analisar a coerência entre as preferências eliciadas numa escala ordinal e cardinal. A informação recolhida, através de fonte primária, foi analisada econometricamente através de modelos logístico, logístico ordenado, logístico ordenado generalizado, regressão de intervalo e probabilístico ordenado. A escolha do modelo dependeu dos dados recolhidos, das características dos modelos que se podem ajustar a esses dados e do resultado dos testes de validação do modelo. Mais de metade dos inquiridos manifesta uma disponibilidade a pagar positiva em cada um dos estudos independentemente do seu domínio. No caso da Fundação Casa da Música, a disponibilidade a pagar depende de variáveis como o rendimento do agregado familiar, o histórico de experiências culturais, o género e as preferências ordinais de valor estético e de opção. Por sua vez, no que diz respeito à paisagem, a disponibilidade a pagar depende do nível de educação, do género, do rendimento, da ideologia e da importância atribuída à preservação ambiental.In 2001, the city of Porto was designated as the European Capital of Culture, leading to numerous cultural activities accompanied by substantial investments in urban redevelopment and new infrastructure construction. The Casa da Música (Concert Hall) and the landscape resulting from the Cordoaria district restoring were the case studies. The contingent valuation method, a survey-based approach, has been used to elicit consumer preferences for cultural goods. The research conducted has employed a wide range of methods. Nevertheless, the questionnaire design, aimed at correcting various bias, are a work in progress in scientific literature. Few studies addressing these issues have been conducted in Portugal. The specific objectives are threefold: i) application of experimental and behavioural economics to analyse biases in eliciting the value of cultural activities; ii) development of a consumer preference model; and iii) examination of the coherence between preferences elicited on an ordinal and cardinal scale. The collected information, from primary sources, was econometrically analysed using logistic, ordered logistic, generalized ordered logistic, interval regression and ordered probit models. The choice of the model was influenced by the collected data, the characteristics of the models that could fit the data, and the results of model validation tests. In each of the independent studies, more than half of the respondents expressed a positive willingness to pay, regardless of the study domain. Concerning the Casa da Música Foundation, the willingness to pay for a concert depends on variables such as household income, cultural experience history, gender, and ordinal preferences for aesthetic and optional value. The willingness to pay for a landscape depends on education level, gender, income, ideology, and importance attributed to environmental preservation

Certified B Corporations and Innovation : Crowdfunding as a Tool for Sustainability

Peer reviewedPublisher PD

Three paths to brand growth: new product introduction, digital advertising, and crowdfunding

This thesis uses empirical techniques of dynamic modelling to examine three major means for brands to achieve sustainable growth, including new product introduction (NPI), digital advertising, and value co-creation with consumers through digital crowdfunding. Essay 1 (Chapter 2) explores the impact of NPI on the performance volatility of the innovating and the competing brands in the CPG industry. Using a GARCH-in-VAR modelling approach, we find that NPI causes a long-term rise in sales volatility of all brands. Such volatility increase is especially significant for new brand entries, premium-priced and more innovative brands, and retailers with a larger assortment and those where private labels dominate. More importantly, NPI's impact through sales volatility on the sales level of brands is consistently positive. Findings from Essay 1 challenge marketers' conventional wisdom to curb volatility and instead highlight brands' potential to benefit from the market turbulence following an NPI. Essay 2 (Chapter 3) investigates the effect of processing disfluency on consumers' decisions to click on digital display advertisements. With consumers flooded by digital ads, it is imperative for marketers to strike a balance between capturing consumer attention and keeping them unannoyed. A series of lab experiments combined with field data modelling using the Dynamic Factor Model indicate that processing disfluency can elicit consumer interest and desire to explore, leading to a higher willingness to click. Such disfluency does not cause consumer ad annoyance and can be induced by negative ad emotional appeals such as fear and sorrow. Essay 3 (Chapter 4) studies investment dynamics between digital crowdfunding investors, who are also the future consumers of the fundraising venture. Recognizing the co-existence between more and less informed investors, our results show that large investments by informed investors are effective signals that positively influence subsequent investors' behaviours. Such an effect is strengthened by a higher level of social similarity between investors and the size of the deal. Our findings shed light on the asymmetric information flows from more to less informed investors, and the complementarity between different types of investors.Open Acces

THE NEW ENTREPRENEURIAL LANDSCAPE AND THE VALUE CO-CREATION PROCESS: THE ROLE OF THE CROWD IN THE PRE-PURCHASE CROWDFUNDING

The entrepreneurial finance landscape is changing very rapidly (Block, Colombo, Cumming, Vismara, 2018). New players have emerged, with a determinant contribution of the technological revolution. The resources interplay in the peer-to-peer business and network has led to the development of new financing instruments able to boosting innovation and the creation of new ventures. Social and economic innovation is searching new ways to emerge; this requires new models for interpreting the enlarged notion of value in the crowd/entrepreneurs relationship. Despite the rapid growth of alternative finance, the academic literature on crowdfunding as a new financing model able to reduce financing constraints for firms, still lack evidence whether and how these new players and their investment approach are transforming the entrepreneurial landscape. In particular, the reference is to the complex mix of economic and social expectations deriving from the participation to the pre-purchase crowdfunding mechanism. Findings from the explorative study suggest that the pre-purchase mechanism is leading to the configuration of new market niches, where supporters act as an informed investor and consumers. Additionally, the joint value created by the efforts made by entrepreneurs and the crowd, creates sounder positive externalities, those favor growth possibilities to survive of the new ventures

참신성에 따른 스타트업 크라우드펀딩 창업 자금 조달 전략

학위논문(박사) -- 서울대학교대학원 : 공과대학 협동과정 기술경영·경제·정책전공, 2023. 2. 황준석.This thesis explores startups' fundraising and development strategies that started from novel ideas to sustainable companies through crowdfunding. From the stage of persuasion by presenting novel ideas to subsequent business development, the study analyzes the factors that enable startups to grow successfully through crowdfunding and accordingly reveals what an effective action strategy from the entrepreneur's point of view is. The purpose of the thesis is to understand the cycle of the campaign, value delivery, and subsequent development while focusing on the strategic perspective of entrepreneurs using crowdfunding as an entrepreneurial fundraising tool. First, at the fundraising point, which is the beginning of crowdfunding startups, the study focuses on indicators that can measure an idea's novelty and explore the behavioral strategies of founders during crowdfunding campaigns according to the degree of novelty. This study proposes a machine learning-based methodological measurement to understand the novelty and presents a behavioral strategy using the method. The study demonstrates that the novelty of an idea is a crucial element in changing the direction project founders must act for successful fundraising in reward-based crowdfunding. The second study proposes a framework for a satisfactory crowdfunding experience for reward-based crowdfunding participants. Through the framework of utilitarian-hedonic value delivery borrowed from consumer research, the study finds the determinants of how founders deliver value to crowdfunding participants after realizing business ideas. This study explores the post-campaign idea implementation and satisfaction delivery process, taking preliminary steps to broadly understand the subsequent business processes after fundraising. The third study examines the differences in characteristics of crowdfunding startups that have attracted follow-up venture funds. In particular, the study analyzes how the timing and valuation of follow-up venture financing are affected by the characteristics of the crowdfunding campaign process. This study in-depth finds the relationship between the process of crowdfunding and long-term sustainable startups.Chapter 1. Introduction 1 1.1. Research Background 1 1.2 Research Objectives 4 1.3 Research Outline 5 Chapter 2. Literature Review 8 2.1 Entrepreneurial Financing 8 2.1.1 Venture Capital 8 2.1.2 Crowdfunding 11 2.1.2.1 Crowdfunding in entrepreneur perspectives 12 2.1.2.2 Crowdfunding in investor perspectives 14 2.2 Idea Realization 16 2.2.1 Signaling theory 18 2.3 Contribution of the study 19 Chapter 3. Effective Strategies to Attract Crowdfunding Investment Based on the Novelty of Business Ideas 23 3.1 Introduction 24 3.2 Literature Review 27 3.2.1 Crowdfunding as entrepreneurial financing and signaling theory 27 3.2.2 Novelty of an idea and crowdfunding success 29 3.2.3 Measuring novelty and innovation performance 31 3.3 Theoretical framework and hypotheses development 33 3.3.1 Ideas novelty 34 3.3.2 Target diversification and an ideas novelty 36 3.3.3 Information updates and two-sided communication 39 3.3.4 Method 45 3.3.4.1 Data sources 45 3.3.4.2 Descriptive statistics 46 3.3.4.3 Dependent and explanatory variables 47 3.3.4.4 Control variables 49 3.3.4.5 Empirical model 51 3.3.5 Results 54 3.3.6 Discussion 66 Chapter 4. Delivering Satisfaction after Crowdfunding through Utilitarian and Hedonic Value Structure 74 4.1 Introduction 75 4.2 Theoretical Background 77 4.2.1 Idea realization in crowdfunding 77 4.2.2 Market feedback from funder satisfaction after fundraising 78 4.2.3 Idea implementing capacity: delivering the utilitarian value 81 4.2.4 Emotional satisfaction of participating innovation: improving the hedonic value 84 4.3 Research objective, Methodology, and Data 88 4.3.1 Research objective and data source 88 4.3.2 Dependent variable 89 4.3.3 Explanatory variables 90 4.3.4 Control variables 91 4.3.5 Descriptive statistics 92 4.3.6 Empirical model 93 4.4 Results and Discussion 96 4.4.1 Empirical results 96 4.4.2 Discussion 99 4.5 Conclusion 102 4.5.1 Limitations and further studies 103 Chapter 5. Subsequent funding of crowdfunded startups: Focusing on factors affecting follow-up funding amount and timing 105 5.1 Introduction 106 5.2 Theoretical framework and hypotheses 109 5.2.1 Crowdfunding as entrepreneurial financing 109 5.2.2 Venture financing performance: amount and timing 112 5.2.3 Research framework 113 5.2.4 Feedback aspect and follow-up financing 114 5.2.4.1 Securing market expectation 114 5.2.4.2 Securing market satisfaction/dissatisfaction 117 5.2.5 Relationships with investors and follow-up funding 119 5.3 Data and method 122 5.3.1 Data sources 122 5.3.2 Descriptive statistics 123 5.3.3 Dependent and explanatory variables 124 5.3.4 Control variables 127 5.3.5 Empirical model 128 5.4 Results 130 5.5 Discussion with case studies 135 5.6. Limitations and further research 141 Chapter 6. Conclusion 144 6.1 Overall Summary 144 6.2 Implications and Contributions 148박