Pricing Entrepreneurial Risk: Evidence from Crowdlending Market Design

This study investigates how pricing mechanisms on peer-to-business (P2B) crowdlending platforms influence the cost of entrepreneurial capital and access to finance. Drawing on a dataset of 1,240 campaigns from 16 French platforms active in 2017, we leverage a unique institutional setting where crowd-determined and platform-determined pricing coexisted, providing a rare opportunity to compare alternative governance arrangements within the same market environment. We find that platform-determined pricing is associated with significantly lower interest rates than crowd-based pricing, suggesting that centralized pricing authority may help reduce the cost of entrepreneurial capital. Platform-determined pricing are more closely associated with hard, objective information, while decentralized pricing reflects greater heterogeneity in the assessment of entrepreneurial risk. Furthermore, platforms with larger market shares are linked to higher interest rates, indicating that competitive position also shapes entrepreneurial financing conditions. Overall, our results show that the allocation of pricing authority is a key governance choice influencing the pricing of entrepreneurial risk, the cost of entrepreneurial capital, and the distribution of financial resources within digital entrepreneurial finance. By considering pricing as a governance issue rather than a technical market mechanism, this study advances understanding of how digital financial intermediaries shape entrepreneurial finance.