The Role of Diligence in Crowdfunding Platforms

Douglas Cumming* (Corresponding Author), Sofia Johan, Yelin Zhang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

85 Citations (Scopus)
34 Downloads (Pure)


Crowdfunding platform due diligence comprises background checks, site visits, credit checks, cross-checks, account monitoring, and third party proof on funding projects. We evaluate the factors associated with platforms’ compliance expenses, and their due diligence application. We find that due diligence is related to legislation requirement, platform size, and type or complexity of crowdfunding campaigns. In addition, we find that platforms applying due diligence provide more services to project issuers and funders. Furthermore, due diligence is associated with higher percentage of successful campaigns, more fund contributors, and larger amount of capital raised on platforms. Our analyses are supported by platform-level data, covering the period 2014-2017.
Original languageEnglish
Article number105661
Number of pages17
JournalJournal of Banking and Finance
Early online date8 Oct 2019
Publication statusPublished - Nov 2019

Data Availability Statement

No data availability statement.


  • crowdfunding
  • entrepreneurial finance
  • intermediaries


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