Financial Intermediation, Markets, and Alternative Financial Sectors

55 Pages Posted: 26 Mar 2012

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Jun Qian

Fanhai International School of Finance, Fudan University; University of Pennsylvania - Wharton Financial Institutions Center

Elena Carletti

Bocconi University - Department of Finance; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Patricio Valenzuela

University of Chile

Date Written: March 25, 2012

Abstract

We provide a comprehensive review of firms’ financing channels (internal and external, domestic and international) around the globe, with the focus on alternative finance — financing from all the non-market, non-bank external sources. We argue that while traditional financing channels, including financial markets and banks, provide significant sources of funds for firms in developed countries, alternative financing channels provide an equally important source of funds in both developed and developing countries. Alternative finance is often the dominant source of funds for firms in fast-growing economies. We compare market- and bank-finance with alternative finance, along with the supporting mechanisms such as legal and institutional structures. Much more research is needed to better understand alternative finance and its role in corporate financing. We suggest ways to obtain firm-level data on various forms of alternative finance and thus overcome the main obstacle in the field.

Keywords: alternative finance, markets, banks, trade credits, governance, growth

JEL Classification: O5, K0, G2

Suggested Citation

Allen, Franklin and Qian, Jun and Carletti, Elena and Valenzuela, Patricio, Financial Intermediation, Markets, and Alternative Financial Sectors (March 25, 2012). Available at SSRN: https://ssrn.com/abstract=2029082 or http://dx.doi.org/10.2139/ssrn.2029082

Franklin Allen

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Jun Qian (Contact Author)

Fanhai International School of Finance, Fudan University ( email )

Shanghai
China
86-21-63895501 (Phone)
86-21-62934572 (Fax)

HOME PAGE: http://www.fisf.fudan.edu.cn/show-65-69.html

University of Pennsylvania - Wharton Financial Institutions Center

2306 Steinberg Hall-Dietrich Hall
Philadelphia, PA 19104
United States

HOME PAGE: http://fic.wharton.upenn.edu/fic/

Elena Carletti

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Patricio Valenzuela

University of Chile ( email )

Republica 701 Santiago
Chile

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