Samenvatting
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.
| Originele taal-2 | English |
|---|---|
| Pagina's (van-tot) | 280-310 |
| Aantal pagina's | 31 |
| Tijdschrift | Journal of Institutional and Theoretical Economics |
| Volume | 178 |
| Nummer van het tijdschrift | 3 |
| DOI's | |
| Status | Published - 26 sep 2022 |
Bibliografische nota
Funding Information:This research was carried out within the framework of the “Interuni-versity Attraction Pole” on social enterprises, funded by the Belgian Science Policy Office. This work was also supported by the Chair of Banking and Finance, sponsored by the “Fondation Rennes 1.” Valuable inputs were provided by participants at the EMES International Conference, the EIASM Workshop on the Challenges of Managing the Third Sector, and the UCLouvain Economics Seminar. We would especially like to thank Gerd Muehlheusser, two anonymous reviewers, Cécile Abramowicz, Sylvain Abramo-wicz, Anastasia Cozarenco, Bert D’Espallier, Maitreesh Ghatak, Marek Hudon, Johannes Johnen, Marc Labie, Jonathan Morduch, Franck Moraux, and Anaïs Périlleux for their helpful comments, and Tony Bulger and Roxanne Powell for excellent copy-editing.
Funding Information:
Since SFI funds are normalized to 1 and the social screening cost is C , the amount left for funding projects is .1 C/. With that amount, the SFI is willing to finance as many selected projects as possible. If the social contribution generated by one unit of funds granted to a successful social project is also normalized to 1, the SC maximization program of the SFI is given by
Funding Information:
Philanthropy and charitable giving have existed since time immemorial. In the twelfth century, Maimonides established an eight-level classification of charitable giving (tsedakah in Hebrew), which placed pure gifts and zero-interest loans on an * Simon Cornée: Université de Rennes 1, CREM UMR CNRS 6211, and CERMi, Fac-ulté des Sciences Economiques, Rennes, France. Marc Jegers: Vrije Universiteit Brussel (VUB), Department of Applied Economics, Brussels, Belgium. Ariane Szafarz (corresponding author): Université Libre de Bruxelles (ULB), SBS-EM, CEBRIG, and CERMi, Brussels, Belgium. This research was carried out within the framework of the “Interuniversity Attraction Pole” on social enterprises, funded by the Belgian Science Policy Office. This work was also supported by the Chair of Banking and Finance, sponsored by the “Fondation Rennes 1.” Valuable inputs were provided by participants at the EMES International Conference, the EIASM Workshop on the Challenges of Managing the Third Sector, and the UCLouvain Economics Seminar. We would especially like to thank Gerd Muehlheusser, two anonymous reviewers, Cécile Abramowicz, Sylvain Abramo-wicz, Anastasia Cozarenco, Bert D’Espallier, Maitreesh Ghatak, Marek Hudon, Johannes Johnen, Marc Labie, Jonathan Morduch, Franck Moraux, and Anaïs Périlleux for their helpful comments, and Tony Bulger and Roxanne Powell for excellent copy-editing.
Publisher Copyright:
© 2022 Mohr Siebeck.
Copyright:
Copyright 2022 Elsevier B.V., All rights reserved.