Handbook of the Economics of Finance

Chapter 11

Financial Intermediation, Markets, and Alternative Financial Sectors^*

Franklin Allen^a, Elena Carletti^b, Jun “QJ” Qianc^c and Patricio Valenzuela^d

^aFinance Department, Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA

^bEuropean University Institute, Florence, Italy

^cBoston College, Chestnut Hill, MA, USA

^dUniversity of Chile, Department of Industrial Engineering, Santiago, Chile, [e-mail]

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 ...