Borrowers Characteristics and Crowdfunding Success for Small and Medium Enterprises in Tanzania

Abstract

This study examined the influence of borrowers’ characteristics on the success of crowdfunding campaigns among Tanzanian Small and Medium Enterprise (SMEs) using secondary data from the Kiva lending-based crowdfunding platform. The study adopts a quantitative research approach using a cross-sectional design, based on secondary data obtained from a crowdfunding platform. The initial dataset comprised 12,273 observations; however, after data cleaning and removal of missing values, a final sample of 12,139 observations was used for analysis. Binary logistic regression was conducted in Stata to assess the effect of borrower characteristics, including age, gender, experience, and education level, on the likelihood of crowdfunding success. The results indicate that gender (β = −0.731, p < 0.01), borrower experience (β = −0.100, p < 0.01), and education level (Certificate β = 1.476, p < 0.01; Diploma β = 1.339, p < 0.01) significantly influence crowdfunding success. The findings further reveal that female borrowers are more likely to obtain funding than male borrowers. Borrower experience shows a significant negative relationship with crowdfunding success, suggesting that repeated borrowing does not necessarily improve funding prospects. Education shows mixed effects: degree holders show no significant effect, whereas master’s degree holders show a significant negative relationship (β = −1.328, p < 0.01). The overall model was statistically significant (χ² = 131.905, p < 0.01), with a pseudo-R² of 0.085, indicating modest explanatory power. The study contributes to the limited empirical evidence on crowdfunding in developing countries and provides practical insights for entrepreneurs, policymakers, and crowdfunding platforms on improving alternative financing outcomes. Future studies may incorporate additional behavioural and campaign-related factors.