IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v70y2020ics1057521920301630.html
   My bibliography  Save this article

Delineating social finance

Author

Listed:
  • Andrikopoulos, Andreas

Abstract

This paper reviews social finance. Venture philanthropy, microfinance, crowdfunding and social impact bonds are financial and social innovations that reshape capital markets, the production of public goods, entrepreneurship and the fundamental principles of financial analysis. In this context, the pursuit of social and environmental impact is assessed alongside the tradeoff between risk and expected return. The market for impact investments consists of suppliers of capital, recipients of capital, the institutional framework and financing flows. This paper describes the financial market for the pursuit of impact and highlights principal challenges, such as the small scale and long horizon of social ventures, the lack of standardized reporting and financial measures for social outcomes, as well as the elusive causality between impact investments and social change.

Suggested Citation

  • Andrikopoulos, Andreas, 2020. "Delineating social finance," International Review of Financial Analysis, Elsevier, vol. 70(C).
  • Handle: RePEc:eee:finana:v:70:y:2020:i:c:s1057521920301630
    DOI: 10.1016/j.irfa.2020.101519
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521920301630
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.irfa.2020.101519?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Louise Yi Lu & Greg Shailer & Yangxin Yu, 2017. "Corporate Social Responsibility Disclosure and the Value of Cash Holdings," European Accounting Review, Taylor & Francis Journals, vol. 26(4), pages 729-753, October.
    2. Hudik, Marek & Chovanculiak, Robert, 2018. "Private provision of public goods via crowdfunding §," Journal of Institutional Economics, Cambridge University Press, vol. 14(1), pages 23-44, February.
    3. Belleflamme, Paul & Omrani, Nessrine & Peitz, Martin, 2015. "The economics of crowdfunding platforms," Information Economics and Policy, Elsevier, vol. 33(C), pages 11-28.
    4. Christophe Revelli & Jean-Laurent Viviani, 2015. "Financial performance of socially responsible investing (SRI): what have we learned? A meta-analysis," Post-Print halshs-01141295, HAL.
    5. Almudena Martínez-Campillo & Mahinda Wijesiri & Peter Wanke, 2020. "Evaluating the Double Bottom-Line of Social Banking in an Emerging Country: How Efficient are Public Banks in Supporting Priority and Non-priority Sectors in India?," Journal of Business Ethics, Springer, vol. 162(2), pages 399-420, March.
    6. Jonathan Meer & David Miller & Elisa Wulfsberg, 2017. "The Great Recession and charitable giving," Applied Economics Letters, Taylor & Francis Journals, vol. 24(21), pages 1542-1549, December.
    7. Leonardo Becchetti & Maria Melody Garcia, 2011. "Informal collateral and default risk: do 'Grameen-like' banks work in high-income countries?," Applied Financial Economics, Taylor & Francis Journals, vol. 21(13), pages 931-947.
    8. Othmar M. Lehner & Elisabeth Grabmann & Carina Ennsgraber, 2015. "Entrepreneurial implications of crowdfunding as alternative funding source for innovations," Venture Capital, Taylor & Francis Journals, vol. 17(1-2), pages 171-189, April.
    9. Geoffrey M. Hodgson, 2019. "The great crash of 2008 and the reform of economics," Chapters, in: Jonathan Michie (ed.), The Handbook of Globalisation, Third Edition, chapter 28, pages 439-456, Edward Elgar Publishing.
    10. Sadok El Ghoul & Omrane Guedhami & Hakkon Kim & Kwangwoo Park, 2018. "Corporate Environmental Responsibility and the Cost of Capital: International Evidence," Journal of Business Ethics, Springer, vol. 149(2), pages 335-361, May.
    11. Arno Riedl & Paul Smeets, 2017. "Why Do Investors Hold Socially Responsible Mutual Funds?," Journal of Finance, American Finance Association, vol. 72(6), pages 2505-2550, December.
    12. Jillian Gordon, 2014. "A stage model of venture philanthropy," Venture Capital, Taylor & Francis Journals, vol. 16(2), pages 85-107, April.
    13. Elias Erragragui & Christophe Revelli, 2015. "Should Islamic investors consider SRI criteria in their investment strategies?," Post-Print hal-02009789, HAL.
    14. Simon Cornée & Ariane Szafarz, 2014. "Vive la Différence: Social Banks and Reciprocity in the Credit Market," Journal of Business Ethics, Springer, vol. 125(3), pages 361-380, December.
    15. Derigs, Ulrich & Marzban, Shehab, 2009. "New strategies and a new paradigm for Shariah-compliant portfolio optimization," Journal of Banking & Finance, Elsevier, vol. 33(6), pages 1166-1176, June.
    16. Paranque, Bernard, 2017. "The need for an alternative to shareholder value creation? The Ethomed student experience," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 686-695.
    17. Baker, Malcolm & Wurgler, Jeffrey, 2013. "Behavioral Corporate Finance: An Updated Survey," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 357-424, Elsevier.
    18. John Olson & Andrea Phillips, 2013. "Rikers Island: the first Social Impact Bond in the United States," Community Development Innovation Review, Federal Reserve Bank of San Francisco, issue 01, pages 097-101.
    19. Lagoarde-Segot, Thomas, 2015. "Diversifying finance research: From financialization to sustainability," International Review of Financial Analysis, Elsevier, vol. 39(C), pages 1-6.
    20. Maryann Feldman & Alexandra Graddy-Reed, 2014. "Accelerating commercialization: a new model of strategic foundation funding," The Journal of Technology Transfer, Springer, vol. 39(4), pages 503-523, August.
    21. Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-150, January.
    22. Renneboog, Luc & Ter Horst, Jenke & Zhang, Chendi, 2008. "The price of ethics and stakeholder governance: The performance of socially responsible mutual funds," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 302-322, June.
    23. Erragraguy, Elias & Revelli, Christophe, 2015. "Should Islamic investors consider SRI criteria in their investment strategies?," Finance Research Letters, Elsevier, vol. 14(C), pages 11-19.
    24. Ellman, Matthew & Hurkens, Sjaak, 2019. "Optimal crowdfunding design," Journal of Economic Theory, Elsevier, vol. 184(C).
    25. Revelli, Christophe, 2016. "Re-embedding financial stakes within ethical and social values in socially responsible investing (SRI)," Research in International Business and Finance, Elsevier, vol. 38(C), pages 1-5.
    26. Lagoarde-Segot, Thomas, 2019. "Sustainable finance. A critical realist perspective," Research in International Business and Finance, Elsevier, vol. 47(C), pages 1-9.
    27. Simon Cornée & Panu Kalmi & Ariane Szafarz, 2016. "Selectivity and Transparency in Social Banking: Evidence from Europe," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 494-502, April.
    28. Antara Haldar & Joseph E. Stiglitz, 2016. "Group Lending, Joint Liability, and Social Capital," Politics & Society, , vol. 44(4), pages 459-497, December.
    29. Patten, Dennis M., 1992. "Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory," Accounting, Organizations and Society, Elsevier, vol. 17(5), pages 471-475, July.
    30. Roland Benedikter, 2011. "Social Banking and Social Finance," SpringerBriefs in Business, Springer, number 978-1-4419-7774-8, October.
    31. G.M. Constantinides & M. Harris & R. M. Stulz (ed.), 2013. "Handbook of the Economics of Finance," Handbook of the Economics of Finance, Elsevier, volume 2, number 2-b.
    32. G.M. Constantinides & M. Harris & R. M. Stulz (ed.), 2013. "Handbook of the Economics of Finance," Handbook of the Economics of Finance, Elsevier, volume 2, number 2-a.
    33. Cho, Charles H. & Roberts, Robin W. & Patten, Dennis M., 2010. "The language of US corporate environmental disclosure," Accounting, Organizations and Society, Elsevier, vol. 35(4), pages 431-443, May.
    34. Donald MacKenzie, 2006. "An Engine, Not a Camera: How Financial Models Shape Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262134608, December.
    35. Gasser, Stephan M. & Rammerstorfer, Margarethe & Weinmayer, Karl, 2017. "Markowitz revisited: Social portfolio engineering," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1181-1190.
    36. Belghitar, Yacine & Clark, Ephraim & Deshmukh, Nitin, 2014. "Does it pay to be ethical? Evidence from the FTSE4Good," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 54-62.
    37. Hassan, M. Kabir & Aliyu, Sirajo, 2018. "A contemporary survey of islamic banking literature," Journal of Financial Stability, Elsevier, vol. 34(C), pages 12-43.
    38. Schinckus, Christophe, 2017. "Financial innovation as a potential force for a positive social change: The challenging future of social impact bonds," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 727-736.
    39. Othmar M. Lehner, 2014. "The formation and interplay of social capital in crowdfunded social ventures," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 26(5-6), pages 478-499, August.
    40. Leif Atle Beisland & Bert D’Espallier & Roy Mersland, 2019. "The Commercialization of the Microfinance Industry: Is There a ‘Personal Mission Drift’ Among Credit Officers?," Journal of Business Ethics, Springer, vol. 158(1), pages 119-134, August.
    41. Maricruz Lacalle‐Calderon & José Maria Larrú & Silvia Rico Garrido & Manuel Perez‐Trujillo, 2019. "Microfinance and income inequality: New macrolevel evidence," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 860-876, May.
    42. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    43. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    44. Thomas Lagoarde-Segot, 2015. "Diversifying finance research: From financialization to sustainability," Post-Print hal-01456136, HAL.
    45. Yuchao Xiao & Robert Faff & Philip Gharghori & Byoung-Kyu Min, 2017. "The Financial Performance of Socially Responsible Investments: Insights from the Intertemporal CAPM," Journal of Business Ethics, Springer, vol. 146(2), pages 353-364, December.
    46. Roland Benedikter, 2011. "Social Banking and Social Finance," SpringerBriefs in Business, in: Social Banking and Social Finance, pages 1-128, Springer.
    47. Fiordelisi, Franco & Mare, Davide Salvatore, 2014. "Competition and financial stability in European cooperative banks," Journal of International Money and Finance, Elsevier, vol. 45(C), pages 1-16.
    48. Revelli, Christophe, 2017. "Socially responsible investing (SRI): From mainstream to margin?," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 711-717.
    49. Thomas Lagoarde-Segot, 2019. "Sustainable finance. A critical realist perspective," Post-Print halshs-03559024, HAL.
    50. Artis, Amélie, 2017. "Social and solidarity finance: A conceptual approach," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 737-749.
    51. Yunieta Nainggolan & Janice How & Peter Verhoeven, 2016. "Ethical Screening and Financial Performance: The Case of Islamic Equity Funds," Journal of Business Ethics, Springer, vol. 137(1), pages 83-99, August.
    52. Paranque, Bernard & Revelli, Christophe, 2019. "Ethico-economic analysis of impact finance: The case of Green Bonds," Research in International Business and Finance, Elsevier, vol. 47(C), pages 57-66.
    53. Lagoarde-Segot, Thomas & Paranque, Bernard, 2018. "Finance and sustainability: From ideology to utopia," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 80-92.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Syrus M. Islam, 2022. "Impact investing in social sector organisations: a systematic review and research agenda," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 709-737, March.
    2. Irene Bengo & Alice Borrello & Veronica Chiodo, 2021. "Preserving the Integrity of Social Impact Investing: Towards a Distinctive Implementation Strategy," Sustainability, MDPI, vol. 13(5), pages 1-19, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lagoarde-Segot, Thomas & Martínez, Enrique A., 2021. "Ecological finance theory: New foundations," International Review of Financial Analysis, Elsevier, vol. 75(C).
    2. Thomas Lagoarde-Segot, 2020. "Financing the Sustainable Development Goals," Sustainability, MDPI, vol. 12(7), pages 1-22, April.
    3. Lagoarde-Segot, Thomas & Paranque, Bernard, 2018. "Finance and sustainability: From ideology to utopia," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 80-92.
    4. Simon Cornée & Anastasia Cozarenco & Ariane Szafarz, 2023. "The Changing Role of Banks in the Financial System: Social Versus Conventional Banks," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Chrysovalantis Gaganis & Fotios Pasiouras & Menelaos Tasiou & Constantin Zopounidis (ed.), Sustainable Finance and ESG, pages 1-25, Palgrave Macmillan.
    5. Simon Cornée & Anastasia Cozarenco & Ariane Szafarz, 2023. "The Changing Role of Banks in the Financial System: Social Versus Conventional Banks," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Chrysovalantis Gaganis & Fotios Pasiouras & Menelaos Tasiou & Constantin Zopounidis (ed.), Sustainable Finance and ESG, pages 1-25, Palgrave Macmillan.
    6. Simon Cornée & Panu Kalmi & Ariane Szafarz, 2020. "The Business Model of Social Banks," Kyklos, Wiley Blackwell, vol. 73(2), pages 196-226, May.
    7. Garg, Aashish & Goel, Pooja & Sharma, Anuj & Rana, Nripendra P., 2022. "As you sow, so shall you reap: Assessing drivers of socially responsible investment attitude and intention," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    8. Maria-Teresa Bosch-Badia & Joan Montllor-Serrats & Maria-Antonia Tarrazon-Rodon, 2018. "Sustainability and Ethics in the Process of Price Determination in Financial Markets: A Conceptual Analysis," Sustainability, MDPI, vol. 10(5), pages 1-24, May.
    9. Christian Walter, 2020. "Sustainable Financial Risk Modelling Fitting the SDGs: Some Reflections," Sustainability, MDPI, vol. 12(18), pages 1-28, September.
    10. Mario La Torre & Helen Chiappini (ed.), 2020. "Contemporary Issues in Sustainable Finance," Palgrave Studies in Impact Finance, Palgrave Macmillan, number 978-3-030-40248-8, December.
    11. Jonathan Peillex & Sabri Boubaker & Breeda Comyns, 2021. "Does It Pay to Invest in Japanese Women? Evidence from the MSCI Japan Empowering Women Index," Journal of Business Ethics, Springer, vol. 170(3), pages 595-613, May.
    12. Simon Cornée & Panu Kalmi & Ariane Szafarz, 2016. "Selectivity and Transparency in Social Banking: Evidence from Europe," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 494-502, April.
    13. Barigozzi, Francesca & Tedeschi, Piero, 2019. "On the credibility of ethical banking," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 381-402.
    14. Simon Cornée & Ariane Szafarz, 2018. "How Costly is Social Screening? Evidence from the Banking Industry," Economics Bulletin, AccessEcon, vol. 38(1), pages 532-540.
    15. Alda, Mercedes, 2020. "ESG fund scores in UK SRI and conventional pension funds: Are the ESG concerns of the SRI niche affecting the conventional mainstream?," Finance Research Letters, Elsevier, vol. 36(C).
    16. Carè, R. & Weber, O., 2023. "How much finance is in climate finance? A bibliometric review, critiques, and future research directions," Research in International Business and Finance, Elsevier, vol. 64(C).
    17. Helen Chiappini & Gianfranco Vento & Leonardo De Palma, 2021. "The Impact of COVID-19 Lockdowns on Sustainable Indexes," Sustainability, MDPI, vol. 13(4), pages 1-18, February.
    18. Dan Daugaard, 2020. "Emerging new themes in environmental, social and governance investing: a systematic literature review," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1501-1530, June.
    19. Bernal, Oscar & Hudon, Marek & Ledru, François-Xavier, 2021. "Are impact and financial returns mutually exclusive? Evidence from publicly-listed impact investments," The Quarterly Review of Economics and Finance, Elsevier, vol. 81(C), pages 93-112.
    20. Alessandro Rizzello & Abdellah Kabli, 2020. "Sustainable Financial Partnerships for the SDGs: The Case of Social Impact Bonds," Sustainability, MDPI, vol. 12(13), pages 1-22, July.

    More about this item

    Keywords

    Social finance; Impact investments; Social enterprise; Social economy; Venture philanthropy;
    All these keywords.

    JEL classification:

    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:70:y:2020:i:c:s1057521920301630. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.