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Challenges for European welfare systems. A research agenda on social impact bonds


  • Giulio Pasi

    () (Institute for Advanced Study of Pavia)


First, the Social Business Initiative of the European Commission and then the G8 Social Impact Investment Taskforce: these are meaningful indicators of a novelty overlooking the scene of European public policies. While many advocate the numerous benefits that social finance, and especially Social Impact Bond (SIB), will bring in the welfare systems, it seems useful to point out a considerable and comprehensible confusion. The complexity of the instruments at issue and the difficulties arisen in the first trials, require designing a depth exploration, in particular with regard to SIBs. A SIB is a financial transaction that brings together seemingly contrary forces that turn out to be uniquely capable of producing new life forms when taking advantage of their interdependencies: through a complex partnership between investors, social service providers and public administrations, SIBs develop a contractual structure that provides reimbursement and remuneration of investments by virtue of potential savings related to the social outcomes reached by social service providers. Therefore, at the same time SIB may acts as leverage for social service providers, a tool for the sustainability of public spending and an asset class for investors. The implementation of these financial instruments raises a number of important challenges to deal with, both from the point of view of its economic features and the related legal issues. The main goals this paper aims to pursue are: (i) find the socio-economic rationale of SIBs, (ii) outline an introductory and theoretically acceptable framework for the study of SIBs, (iii) indicate a possible agenda of the crucial and outstanding problems to be addressed. In other words, the aim of this paper is to sketch a possible road map to meet the challenges that Europe is facing, in the belief that an essential contribution will come from socio-economic research.

Suggested Citation

  • Giulio Pasi, 2014. "Challenges for European welfare systems. A research agenda on social impact bonds," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 8(2), pages 141-150, June.
  • Handle: RePEc:rse:wpaper:v:8:y:2014:i:2:p:141-150

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    References listed on IDEAS

    1. Jade Wong & Andreas Ortman & Alberto Motta & Le Zhang, 2013. "Understanding Social Impact Bonds and Their Alternatives: An Experimental Investigation," Discussion Papers 2013-21, School of Economics, The University of New South Wales.
    2. Esty, Benjamin C. & Megginson, William L., 2003. "Creditor Rights, Enforcement, and Debt Ownership Structure: Evidence from the Global Syndicated Loan Market," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 37-60, March.
    3. João Pinto, 2014. "What is Project Finance?," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.
    4. Benjamin C. Esty, 2004. "Why Study Large Projects? An Introduction to Research on Project Finance," European Financial Management, European Financial Management Association, vol. 10(2), pages 213-224.
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    More about this item


    social impact bonds; social finance; impact investing; project financing; public-private partnership; welfare system; social service; public policy.;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises


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