Social Trust and Initial Coin Offerings

This paper examines the effect of social trust on ICO performance for a sample of 427 projects from 52 countries (2016–2022). Results indicate that increased levels of social trust contribute significantly to the number of ICOs issued and the capital raised, whereas institutional trust is not significant. The research also underscores the relevance of cybersecurity, and regulatory climate in facilitating the success of blockchain fundraising. These findings, which remain robust to endogeneity, provide a new understanding of the role of informal institutions such as social trust in decentralized capital markets as well as of formal ones.<p></p>