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The purpose-driven crowdfunding and the growing potential of microlending
Maiolini, Riccardo
Tedeschi, Caterina Rullani, Francesco
Tedeschi, Caterina
Rullani, Francesco
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Abstract
Frame of the research: Crowdfunding has emerged as a transformative fintech solution, significantly changing the financing of new projects. Among the various forms of crowdfunding, purpose-driven platforms like Kiva transcend traditional financial transactions by emphasizing social and economic empowerment. Despite its potential, there remains a gap in understanding how borrowers’ narratives influence lenders’ decisions, particularly in contexts where social motivations are paramount. This research aims to bridge this gap by analyzing the narratives used by borrowers to describe their projects on the Kiva platform.
Purpose of the paper: This study seeks to explore and classify the different types of narratives employed by borrowers on Kiva to attract funding. By doing so, it aims to uncover the socio-economic impacts of these loans and the role of crowdfunding as a driver for social and economic empowerment. The research focuses on linking the intrinsic motivations of lenders and the narratives presented by borrowers.
Method: This study employs a topic modeling approach to analyze a dataset of Kiva- funded projects, focusing on borrowers’ narratives. The methodology includes data cleaning, visualization, and topic modeling using Latent Dirichlet Allocation (LDA) applied to text from the “use” and “description” sections of Kiva projects’ pages from 2005 to 2021.
Results: Our analysis uncovered eight distinct loan narratives, each associated with various types of entrepreneurial projects. These narratives range from agricultural advancements to educational pursuits, highlighting the diverse aspirations of borrowers. This diversity not only demonstrates the broad spectrum of entrepreneurial projects supported by crowdfunding, but also emphasizes the nature of these loans in meeting the specific needs and goals of individuals across different regions and sectors.
Limits: Our study’s scope is limited to data from the Kiva platform, affecting the extent of our conclusions. Future research should expand to include multiple crowdfunding sources to enhance the diversity and applicability of findings.
Practical implications: By comprehending the diverse entrepreneurial initiatives facilitated by Kiva loans, stakeholders can customize financial products and support services to better align with the requirements of borrowers. This insight is crucial for enhancing the efficacy of microfinance in fostering economic development and empowering underserved communities.
Originality of the paper: Through the identification of specific borrowers’ narratives, this research contributes to the broader discourse on financial inclusion, economic empowerment, and the role of crowdfunding in facilitating access to capital for underserved communities. This study not only provides a deeper understanding of the narratives that drive purpose-driven crowdfunding but also highlights the importance of aligning financial support with the socio- economic goals of borrowers to foster sustainable development and inclusive growth.
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Date
2025
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Keywords
Lending-based prosocial crowdfunding, Purpose-driven crowdfunding, Microlending, Kiva
Citation
Maiolini, Riccardo, Caterina Tedeschi, and Francesco Rullani. “The purpose-driven crowdfunding and the growing potential of microlending”, In Imagining a Better World: How Are Companies Transforming Capitalism?, edited by Rosangela Feola, Laura Michelini, Andrea Piccaluga, Michael Pirson, and Federico Brunetti, special issue, Sinergie Italian Journal of Management, 43 (1): 121-143. 2025.