EVALUATING THE EFFECTIVENESS OF CROWDFUNDING PLATFORMS IN RAISING CAPITAL FOR SMALL AND MEDIUM ENTERPRISES (SMES) IN DEVELOPING ECONOMIES

Abstract

This study evaluates the effectiveness of crowdfunding platforms in raising capital for small and medium enterprises (SMEs) in developing economies, where access to traditional sources of finance is often constrained by credit market imperfections and institutional limitations. Adopting a mixed-method experimental research design, the study combines quantitative analysis of crowdfunding campaign performance data with qualitative insights from SME owners and platform stakeholders. The quantitative results demonstrate that crowdfunding significantly enhances SMEs’ ability to mobilize capital, with investor participation, campaign duration, funding target alignment, and platform characteristics emerging as critical determinants of fundraising success. Visual and tabular analyses further reveal strong positive relationships between crowd engagement and capital raised, alongside notable sectoral and cross-country variations influenced by macroeconomic and regulatory environments. Qualitative findings complement these results by emphasizing the importance of trust, transparency, digital literacy, and regulatory clarity in shaping both investor behavior and SME adoption of crowdfunding. Overall, the study provides robust empirical evidence that crowdfunding platforms function as effective alternative financing mechanisms, contributing to financial inclusion, entrepreneurial growth, and the strengthening of digital financial ecosystems in developing economies.