|Hornuf, Lars; Schwienbacher, Armin (20. March 2014): Should Securities Regulation Promote Crowdinvesting? Discussion Papers in Economics 2014-27|
In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional ‘law & finance’ view that stronger investor protection is better. This situation is particularly relevant in crowdinvesting, which refers to a recent financial innovation originating on the Internet and targets small, innovative firms. In many jurisdictions, securities regulation offers exemptions to prospectus and registration requirements. We provide an into-depth discussion of recent regulatory reforms in different countries and discuss how they may impact crowdinvesting. Building on a theoretical framework, we show that optimal regulation depends on the availability of alternative early-stage financing such as venture capital and angel finance. Finally, we offer exploratory portal-level evidence from Germany on the impact of securities regulation on small business finance.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||crowdinvesting, crowdfunding, securities regulation, investor protection|
Economics > Munich Discussion Papers in Economics
|Subjects:||300 Social sciences > 330 Economics|
|JEL Classification:||G20, G18, G38, K22|
|Deposited On:||20. Jun 2014 09:36|
|Last Modified:||29. Apr 2016 20:38|
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