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Using debt crowdfunding data, we investigate whether borrowers’ writing style is associated with an online lender and borrower behaviors, whether the information contained in linguistic style can mitigate information asymmetry in peer-to-peer markets, and whether online investors correctly interpret the economic value of written texts. Peer-to-peer lenders bid more aggressively, are more likely to fund, and charge lower rates to online borrowers whose writing is more readable, more positive, and contains fewer deception cues. Moreover, such borrowers are less likely to default. Online investors, however, fail to fully account for the information contained in borrowers’ writing.

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Despite the growing popularity of online public funding for education (i.e., crowdfunding), controversy persists about whether teachers’ efforts to use this channel are justified and whether donations thus received can actually make a difference in students’ academic performance. We present the first empirical evidence of the positive influence of online education crowdfunding after teachers successfully raise funds. Using data from California public school teachers and their students, as well as the teachers’ fundraising activities on DonorsChoose.org , we find significant academic performance improvements among students after their teachers receive donations through this platform. Such improvements in students’ academic performance are stronger when more local donors participate in teachers’ fundraising campaigns. Notably, teachers who attempt to raise funds online but are unsuccessful are still able to improve their students’ performance. These findings not only document the positive impact of online education crowdfunding on students’ academic performance, but also demonstrate that such impacts are at least partially attributable to the nonfinancial motivational benefits on teachers from receiving such donations. Our study therefore contributes to the literature on crowdfunding, as well as the ongoing debates surrounding the financing of public education.

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