The Persuasive and Informative Effects of Information Disclosure : Evidence from an Online Supply Chain Finance Market

This paper examines the influence of information disclosure on lenders' behaviors in a crowdfunded supply chain finance (SCF) market, a novel “FinTech” initiative that transforms the existing value chains via alternative leading. Unlike prior research that takes a static view and focuses on investment incidences at the aggregate level, we jointly model the lenders' browsing and funding dynamics at a more granular, individual level. Specifically, we develop a two-stage structural model to uncover how lenders' behaviors are affected by an exogenous information-disclosure policy change. In the first stage, we estimate its effect on lenders' browsing propensity using a logit demand estimation model. In the second stage, we model lenders' investment decisions under a Bayesian learning framework. The proposed model allows us to calibrate individuals' learning toward the reliability of the borrowers – a unique lender behavior that has not been investigated in crowdfunding research. Our results show that displaying popularity statistics of the platform has a persuasive effect on lenders' browsing behavior. This effect leads to a higher browsing propensity and the magnitude of the effect is accentuated by the level of information accessibility. Our results also demonstrate the evidence of individual learning in the crowdfunding context. Disclosing extra information regarding fundraisers' credit gives rise to an informative effect, which accelerates the learning process and helps lenders make sound investment decisions. Finally, we find that an individual's perception of a guarantor's reliability has moderating effects on observable loan attributes: when the individual perceives a guarantor to be more reliable, he tends to care less about the interest rate but pays more attention to the loan duration in making her investment decision. Our findings offer important managerial implications for fundraisers and platform designers in the online SCF market