Authors: Paraskevi Boufounou, Konstantinos Dellis

Title: FINANCIALISATION, SUSTAINABLE FINANCE AND INNOVATIVE FINANCING FOR DEVELOPMENT MECHANISMS: THE GREEK CASE STUDY FOR CROWDFUNDING AND GREEN BONDS

Abstract

The role of the financial system for economic development and improvements in well-being is indisputable. The financial turmoil following the 2008 global financial crisis and more recently the COVID-19 pandemic have reshuffled interest to the finance and development nexus. On top of that, the advances in ICT technology and the rapid globalization process has presented us with new means for international and regional finance and not only new challenges. In this global framework, the innovations in the financial system and the emergence of a bevy of innovative financial instruments that can shape the future in development finance. The creation and enhancement of innovative financial tools can provide with fruitful policy lessons for both developing and advanced economies. Especially in the case of DEEs, under the growing concept of financialization that has accompanied the globalized economy, this new set of financing vessels and methods can emerge as solutions to many structural bottlenecks. In addition, the cooperative nature of some of these instruments can facilitate the break in fragmentation associated with financial conditions in the EU and the Eurozone.

In this study we look at the potential of these novel financial instruments namely the Innovative Financing for Development Mechanisms (IFDMs). Bearing in mind the adverse financial conditions in many emerging and advanced economies, the high risk associated to innovative activities and intangible assets, the growing levels of private and public debt and the need to address sustainability on top of economic growth, these instruments are of pivotal importance. We consider the Greek economy as a case study and elaborating on the structure and functioning of crowdfunding and green bonds, we identify the potential given the current financial adversities, but also highlight the need for a comprehensive global governance and legislation built around those tools, concluding that these innovative forms of finance although currently at a premature level compared to regional averages,  could play a considerable part in the rejuvenation of the domestic financial system in this time of need.