Alternative forms of external finance : a survey

The main purpose of this paper is to survey the existing literature on alternative finance (AF) and indicate the major research gaps. In this way, the survey may help to identify the factors influencing the flow of AF; provide analytical, and empirically supported underpinnings for policy work; and assess the amounts likely to be available. The focus of this survey is on aspects of country risks related to AF and the dispute settlement of international claims, domestic incentive schemes to attract foreign financing, the intermediation role of multinational firms and banks, and the supply side of AF.The survey thus investigates the incentives for individuals and firms, and, where necessary, takes into account the aggregate implications. The paper provides some descriptive statistics of AF and makes a comparison with traditional finance (TF). It identifies the key characteristics in which AF differs from TF and briefly reviews the factors motivating capital flows. The paper identifies the extent to which TF and AF differ in the factors motivating capital flows and to what extent the implications of these differences have been explored in the literature to date.