Economics

Simon Cornée, Marc Jegers, Ariane Szafarz

Feasible Institutions of Social Finance: A Taxonomy

Online First, pp. 1-31 (31)
Published 01.07.2022

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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.
Authors/Editors

Simon Cornée No current data available.

Marc Jegers No current data available.

Ariane Szafarz No current data available.