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Feasible Institutions of Social Finance: A Taxonomy

Author

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  • Simon Cornée

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Marc Jegers

    (VUB - Vrije Universiteit Brussel [Bruxelles])

  • Ariane Szafarz

    (ULB - Université libre de Bruxelles)

Abstract

This paper unpacks the continuum of social finance institutions (SFIs), ranging from foundations offering pure grants to social banks supplying soft loans. The in-between category includes quasi-foundations granting loans requiring partial repayment. In our model, SFIs maximize their social contribution arising from financing successful social projects, under a budget constraint dictated by their funders. We determine the feasibility of each SFI category. Quasi-foundations appear to be efficient and adapted to low market rates. However, reciprocity from SFI borrowers can elicit a so-called hold-up effect, whereby the SFI charges a high interest rate to its loyal clients.

Suggested Citation

  • Simon Cornée & Marc Jegers & Ariane Szafarz, 2022. "Feasible Institutions of Social Finance: A Taxonomy," Post-Print hal-03830596, HAL.
    • Handle: RePEc:hal:journl:hal-03830596
    DOI: 10.1628/jite-2022-0010
    Note: View the original document on HAL open archive server: https://hal.science/hal-03830596
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    Cited by:

    1. 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.
    2. Bernal, Oscar & Hudon, Marek & Ledru, François-Xavier, 2025. "Who buys social bank shares? Exploring individual financial and non-pecuniary motives," Journal of Behavioral and Experimental Finance, Elsevier, vol. 46(C).

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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