Motivations and barriers to crowdlending as a tool for diasporic entrepreneurial finance

The flow of money from members of diasporas and their descendants back to their homelands is significant. In fact, such investments, when made in the form of loans aimed at sustaining entrepreneurship, can contribute to the economic development of the diasporan’s home country. Given the increasing relevance of crowdlending as a method of entrepreneurial finance in developing countries, what are the factors that motivate diasporans to invest through online crowdlending instead of through more traditional options, and what barriers hinder them from doing so? We present a theoretical analysis that draws on the existing literature on crowdfunding and transnational entrepreneurship combined with field interviews with three founders of online diasporic platforms. We discuss the variables that must be taken into account when explaining the motivations of diasporans and the barriers hindering their engagement in online microlending. Several areas are highlighted for future theoretical and empirical research to study this largely under-researched phenomenon.