Alternative Finance: a Modern Econometric Exploration into Global Trends and Influences

Abstract

In the wake of the 2007-2008 financial crisis, the global landscape experienced the burgeoning growth of the alternative finance sector, a countermeasure to stricter banking regulations. Drawing from 2020 data across 67 countries, this study delivers a meticulous econometric analysis to unravel the intricate determinants of this industry's growth. Utilizing a comprehensive model, the research delineates the associations between alternative financial instruments and critical socio-economic indicators. An ensuing reduced model accentuates these relationships, spotlighting the significant influence of the Financial Development Index and Economic Freedom. A comparison between the two models offers deep insights, emphasizing the industry's resilience and pivotal role in global financial inclusion, particularly evident during adversities like the COVID-19 pandemic. Ultimately, this research underscores the potential of the alternative finance sector while illuminating its interplay with broader economic metrics. DOI: https://doi.org/10.53486/cike2023.59; UDC: [336.76:004.738.5]:330.43; JEL: G23, C51, O16.