How do monetary incentives influence giving? An empirical investigation of matching subsidies on kiva

• Main Authors: GAO, Zhiyuan, GUO, Zhiling, TANG, Qian
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Monetary incentives; Crowdfunding; Prosocial lending; Matching subsidies; Generalized diference-in-diference; Databases and Information Systems; Management Information Systems
• Online Access: https://ink.library.smu.edu.sg/sis_research/6617; https://ink.library.smu.edu.sg/context/sis_research/article/7620/viewcontent/Gao2021_Article_HowDoMonetaryIncentivesInfluen__1_.pdf
• Institution: Singapore Management University

Matching subsidies, through which third-party institutions provide a dollar-for-dollar match of private contributions made through selected campaigns, have served as effective tools to boost fundraising. We utilize a quasi-experiment on a prosocial crowdfunding platform to examine the effectiveness of matching subsidies in shaping funding outcomes and lender behaviors. Although matching subsidies offer matched loans competitive advantages over unmatched loans, we find that total private contributions made to both matched and unmatched loans increase compared to their prematching counterparts, suggesting a positive spillover effect on unmatched loans. However, matching subsidies lead to decreased private contributions made on the platform after a matching event, revealing an intertemporal displacement effect on existing loans. Furthermore, we find that matching subsidies effectively encourage previously inactive lenders to contribute to matched loans, leading to a motivational crowding-out effect on active lenders’ contributions to unmatched loans. These findings shed new light on the overall effectiveness of matching subsidies provided through online crowdfunding platforms.