Ricardo Emanuel-Correia

This paper examines the non-linear relation between country-level financial and digital literacy of initial public offering (IPOs) underpricing in European stock markets. Analyzing 874 European IPOs from 2015-2024, using quadratic regression models with controls for offer size, firm age, overallotment provisions, foreign direct investment, month-of-issuance, and industry fixed effects, we identify a U-shaped pattern between IPOs underpricing and financial and digital literacy scores. Our results indicate that IPO underpricing is minimized at intermediate levels of financial literacy, therefore highlighting that countries with high and low financial literacy scores exhibit first-day returns that are higher than those observed for those with moderate financial literacy levels. For digital literacy (DL), we document a similar yet asymmetric U-shaped pattern peaking at a score of 65.1, within a range of 0-100. Moving from very low digital literacy (DL = 10) to this Goldilocks point reduces underpricing by 30 percentage points (pp). In contrast, increasing DL beyond this point, up to a score of 90, raises underpricing by only 7 pp. The non-linear dual-literacy effects documented here extend prior linear models and highlight that human capital—specifically financial and digital skills—influences primary market pricing efficiency, with implications for issuers, underwriters, investors, and regulators seeking to optimize pricing design and market functioning. Overall, this study makes meaningful contributions to literature by extending behavioral IPO theory to incorporate (i) dual literacy and (ii) nonlinear effects that are absent from prior linear models.

This study draws on framing theory to investigate how microfinance institutions (MFIs) strategically construct a vulnerability‐oriented organisational identity and how this framing influences their funding decisions during the pre‐campaign phase of prosocial crowdfunding. Using a unique dataset of 334,852 microloans issued by 140 MFIs across 59 countries on the Kiva platform, we distinguish between MFIs exclusively listed on Kiva and those also featured on Mix Market. Our findings reveal a pronounced funding bias among MFIs that do not emphasise vulnerability in their framing. In contrast, MFIs that adopt a prognostic vulnerability frame tend to reverse this bias—particularly those solely reliant on Kiva. While both types of MFIs demonstrate some capacity to mitigate funding inequality, the effect is significantly more pronounced among those exclusively listed on Kiva. Our results also point to a potential mission drift, possibly incentivised by Kiva's vulnerability badge system, which may reward financial stability over genuine outreach to vulnerable borrowers. Overall, the findings underscore the central role of institutional framing in shaping MFIs' funding strategies and access to capital for marginalised entrepreneurs in the pre‐campaign phase.

The COVID-19 impact on global poverty dragged another 97 million people into poverty in 2020. Nonetheless, there is scant evidence reporting on the impacts on alternative means of financing designed to enable the poor during this global health crisis. This paper addresses this gap of funding impoverished entrepreneurs by studying the changes in their successfully funded campaigns on the largest crowdfunding microfinance platform prior and during COVID-19. After collecting data from January 2018 to November 2021 for a total of 767,112 campaigns, we report that the COVID-19 pandemic positively impacts on the funding success of the crowdfunding campaigns. However, rises in the daily number of COVID-19 cases negatively associate with campaigns getting fully funded. The odds of campaigns being fully funded decrease by 4.4% for a one thousand increase in new cases.

Despite the relevance of crowdfunding as a financing tool for underrepresented entrepreneurs, prior research pays scant attention to the funding gap for refugee entrepreneurs. Using a composite framework that integrates both entrepreneurship research and signalling theory, the current study investigates how microfinance institutions (MFIs) and refugee entrepreneurs can deploy signals to pursue entrepreneurial opportunities on digital platforms. The results, based on refugee data pertaining to 5615 loans on Kiva during 2015–2018, reveal that when refugee loan campaigns are affiliated with an MFI that itself features lower default rates, achieves high profitability, adopts an entrepreneurial support orientation, operates transnationally and is digitally focused, the campaign achieves better crowdfunding performance outcomes than refugees campaigns affiliated with an MFI that lacks these features. These findings provide clear evidence that when MFIs offer reputational signals, visible to the crowd of lenders, it can increase entrepreneurial financing and democratize resource acquisition among financially excluded refugee entrepreneurs. Plain English Summary: Can microfinance institutions boost crowdfunding among refugee entrepreneurs and their small businesses? Yes, they can. Third-party signals may support growth in alternative finance for #refugees. While research on entrepreneurship has largely targeted immigrant entrepreneurs, the refugee context has been neglected, namely how refugee entrepreneurs fund their economic activities. With signalling literature on new venture financing of entrepreneurship being greatly fragmented, we contribute to the understanding of how crowdfunding microfinance boost venture financing of refugees. We study the gain of legitimacy by refugee entrepreneurs displayed through reputational signals intertwined with the reputation of microfinance institutions (MFI). Our results reveal higher success in funding outcomes when the loan campaign is linked with microfinance institutions with lower loan default rates, higher profitability, driven by entrepreneurial support, operating internationally and with a digital presence, compared with MFI that lacks these features. Our work has relevant implications for underrepresented refugee entrepreneurs, crowdfunding actors, policymakers and scholars. Our findings indicate that the affiliation between refugees-microfinance institutions creates certain reputational signals which enhance entrepreneurial finance and shape conditions for societal integration in the host country. For crowdfunding platforms, we show that to develop an effective, self-perpetuating entrepreneurial ecosystem, they should work to build their reputation among lenders, by capitalizing on and making third-party signals more readily available. At the same time, they must conduct due diligence to assess and monitor MFIs’ behaviour. Policy makers are recommended to build up on this digital microfinance experience to enhance new venturing finance refugee programs. We, thus, extend prior findings about the importance of third-party affiliations by establishing a composite framework of third-party signals in the context of new venture financing for financially excluded communities, and refugees in particular. Accordingly, for scholars, we offer cross-disciplinary insights into which characteristics of intermediaries can facilitate links between the supply (crowd of lenders) and demand (refugee entrepreneurs) sides in prosocial crowdfunding.

This study addresses the successive calls to better understand the contexts of crowdfunding as well as the interplay between social and financial factors in driving lender decisions by deploying economic development theory inspired on the two-sector model. Making recourse to the leading prosocial crowdfunding platform KIVA, this study examines the impact of the business-loan purpose (traditional vs modern) on the success of fundraising campaigns. The results indicate how modern-sector business loan campaigns lead to faster funding from crowdfunding campaigns. Furthermore, when directed towards modern sectors, large loans emerge as more appealing to lenders, indicating how large loans go to financing high-return projects. Female microentrepreneurs gain an advantage over men in both the traditional and modern sectors. However, the comparative advantage of female microentrepreneurs becomes less pronounced among modern-related loan campaigns. Overall, the findings support how the global crowdfunded microfinance ecosystem boosts the transition of poor microentrepreneurs to a modern economy and thereby avoiding development traps, and thus also providing theoretical insights into predicting prosocial lending decisions regarding sectoral choices.

The chapter argues that economic analysis of household water demand, and policies to control such demand, would benefit from the insights of behavioural economics. It surveys recent literature on residential water demand and points to a number of factors for the limited uptake of behavioural economics in this field, the most significant being inadequate data to test such approaches. The chapter outlines four areas which might benefit from the application of behavioural economics: to improve understanding on the structure of water prices, using prospect theory and loss aversion; to assess the possibility that price and income elasticities of demand are asymmetric; to study social aspects of water demand, in particular those related to the concept of fairness; and lastly, to highlight the role of social norms in water consumption decisions.