The Entrepreneurial Credit Paradox: Legal Form, Personal Liability, and Credit Risk in Peer-to-Peer Crowdfunding
This study challenges the conventional assumption that incorporation reduces borrower risk by demonstrating that, in peer-to-peer crowdfunding markets, sole proprietorships with unlimited personal liability are significantly less likely to be classified as high-risk compared to similar private limited firms, suggesting that personal liability serves as a credible commitment mechanism under information asymmetry.