Comparative Analysis of Terminology and Alternative Financing Types on the Example of Estonia

Abstract

Alternative financing has gained great popularity since new market players appeared to offer new types of financing in Estonia as well as in other countries of the world. The extent of the alternative financing penetration across the population in Estonia was second highest in European countries after the United Kingdom, in 2016. In recent years, the Estonian market of alternative financing has grown and transformed, taking different complicated forms. The research therefore reveals major types of financing process of the licensed alternative financing providers of Estonia, highlighting its crucial elements, namely, possessors of funds, legal status of fundraising originators and addressees of financing. The research goal was to reveal actual alternative financing types in Estonia. Generally accepted methods of economic research were applied, including a combination of monographic descriptive, qualitative, method of analysis and synthesis. The research was conducted in the form of review with primary data being gathered via multiple on-line resources, such as supervising institutions of Estonia, professional organizations and data bases of licenses issued by Estonian Finance Intelligence Unit (FIU) and Finance Supervisory Authority (FSA). The research findings demonstrate brief review of terminology of alternative financing, licensing aspects of alternative financing providers of Estonia, and major types of financing models actual in Estonia. The presence of banks’ funds in certain alternative financing models was revealed as well.