Crowdfunding Models, Strategies, and Choices Between Them

publishedVersio

Local time and the pricing of time-dependent barrier options

A time-dependent double-barrier option is a derivative security that delivers the terminal value $\phi(S_T)$ at expiry $T$ if neither of the continuous time-dependent barriers b_\pm:[0,T]\to \RR_+ have been hit during the time interval $[0,T]$. Using a probabilistic approach we obtain a decomposition of the barrier option price into the corresponding European option price minus the barrier premium for a wide class of payoff functions $\phi$, barrier functions $b_\pm$ and linear diffusions $(S_t)_{t\in[0,T]}$. We show that the barrier premium can be expressed as a sum of integrals along the barriers $b_\pm$ of the option's deltas \Delta_\pm:[0,T]\to\RR at the barriers and that the pair of functions $(\Delta_+,\Delta_-)$ solves a system of Volterra integral equations of the first kind. We find a semi-analytic solution for this system in the case of constant double barriers and briefly discus a numerical algorithm for the time-dependent case.Comment: 32 pages, to appear in Finance and Stochastic

Lending Crowdfunding : Principles and Market Development

publishedVersio

Introduction : From Fundamentals to Advances in Crowdfunding Research and Practice

publishedVersio

Addressing information asymmetries in online peer-to-peer lending

Digital technologies are transforming how small businesses access finance and from whom. This chapter explores online peer-to-peer (P2P) lending, a form of crowdfunding that connects borrowers and lenders. Information asymmetry is a key issue in online peer-to-peer lending marketplaces that can result in moral hazard or adverse selection, and ultimately impact the viability and success of individual platforms. Both online P2P lending platforms and lenders seek to minimise the impact of information asymmetries through a variety of mechanisms. This chapter discusses the structure of online P2P lending platforms and reviews how the disclosure of hard and soft information, and herding can reduce information asymmetries. The chapter concludes with a discussion of further avenues for research