WHAT FACTORS DRIVE THE SUCCESS IN LITHUANIAN REAL ESTATE CROWDFUNDING?
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Abstract
The volatility of financial markets, the tightening of financing conditions during the global financial crisis, and the rapid growth of fintech technologies have led to the emergence of a new and innovative financial instrument: real estate crowdfunding. The rapid global spread and growing popularity of real estate crowdfunding among investors and project owners have generated interest in research in this area, especially regarding the success factors of such projects. However, to the best of the authors' knowledge, no previous studies have analysed the factors determining the success of real estate crowdfunding projects in Lithuania, thereby emphasising the relevance of this research. The objective of this research endeavour is twofold: firstly, to identify the factors that may influence the success of real estate crowdfunding projects, and secondly, to empirically investigate the effects of these factors in the context of Lithuania's real estate crowdfunding market. To achieve this objective, data from 812 real estate crowdfunding projects on Lithuania's largest real estate crowdfunding platform were utilised. The success of real estate projects was assessed using two variables: the time from project funding in days and the number of investors per project. In addition to these two variables, five project-related factors that may influence the success of such projects were considered. The OLS regression was employed to investigate these effects, and it was revealed that for both indicators of project success, the amount raised, LTV ratio, and project duration had statistically significant effects. It was found that the annual interest rate was a statistically insignificant determinant of real estate project success for both project success indicators. The findings of this research are of paramount importance for project owners seeking to expeditiously and efficaciously raise funding, as well as for crowdfunding platforms in the selection of prospective projects for lucrative financing and the attraction of additional investors.
How to Cite
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RECF, crowdfunding platforms, loan-based crowdfunding, success factors
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