An Empirical Investigation of the Factors Affecting Perceptions of University Students in Pakistan on the Usage of Islamic Equity Crowdfunding

Abstract

Purpose — This paper aims to explore the key motivational factors that influence investors to invest in Islamic equity crowdfunding (I-ECF) platforms. Design/Methodology/Approach — The study is quasi-experimental with a pre-test/post-test design where the respondents, including 350 business and computer studies students from public and private universities in Pakistan, were selected for experimental manipulations, i.e., showing videos. The questionnaire was used to assess the difference in the perceptions of potential investors.  Findings — The results support the hypotheses that project innovativeness, return on investment, perceived informativeness, protection policy and a helping attitude positively influence the investors’ willingness to invest in I-ECF. However, risk of investment and third-party seal were proven to play an insignificant role in influencing the investors’ willingness to invest in I-ECF. Originality/Value — I-ECF is an unexplored phenomenon in Pakistan. This study is limited to finding the key factors that influence students’ inclination towards its usage. Future researchers can study it from an entrepreneur’s perspective. Research Limitations — This study is limited to potential investors’ perspectives towards the usage of I-ECF platforms. However, various other research areas need to be explored such as entrepreneurial intentions, usage of the capital market, platform and institution-related issues for the promotion of I-ECF. Practical Implications — This study will have practical implications for young entrepreneurs, regulators and researchers so that they may capitalise and give weightage to key identified factors for the promotion and usage of I-ECF platforms to raise seed money for new businesses. For example, crowdfunding as an alternative method of financing may gain popularity by making hundreds of connections through brand ambassadors. Universities could partner with equity-based crowdfunding (ECF) platforms like StartEngine as their intra-university platforms. Furthermore, the study provides valuable insights to regulatory bodies to assist them in formulating regulations for I-ECF. If startups (e.g., university incubators) get money from students via ECF platforms, ECF will grow into a sustainable model that can contribute to the country’s long-term development by fostering a knowledge economy as a source of wealth.