Home bias in online investments: An empirical study of an online crowdfunding market

Mingfeng Lin, Siva Viswanathan

Research output: Contribution to journalArticlepeer-review

274 Scopus citations


An extensive literature in economics and finance has documented home bias, the tendency that transactions are more likely to occur between parties in the same geographical area rather than outside. Using data from a large online crowdfunding marketplace and employing a quasi-experimental design, we find evidence that home bias still exists in this virtual marketplace for financial products. Furthermore, through a series of empirical tests, we show that rationality-based explanations cannot fully explain such behavior and that behavioral reasons at least partially drive this remarkable phenomenon. As crowdfunding becomes an alternative and increasingly appealing channel for financing, a better understanding of home bias in this new context provides important managerial, practical, and policy implications.

Original languageEnglish (US)
Pages (from-to)1393-1414
Number of pages22
JournalManagement Science
Issue number5
StatePublished - May 2016
Externally publishedYes


  • Behavioral explanations
  • Crowdfunding
  • Home bias
  • Natural experiment
  • Peer-to-peer lending
  • Quasi-experiment

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research


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