EconPapers    
Economics at your fingertips  
 

A Theory of Social Impact Bonds

David Bloom, Paige Kirby, John Regan and Daniel Tortorice ()

No 17214, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Social impact bonds (SIBs) are an innovative financing mechanism for public goods. In a SIB, an investor provides capital to a service provider for a social intervention. The investor receives a return from the government based on the outcome of the intervention relative to a predetermined benchmark. We describe the basic structure of a SIB and provide some descriptive statistics for these financial instruments. We then consider a formal model of SIBs and examine their ability to finance positive net present value projects that traditional debt finance cannot. We find that SIBs expand the set of implementable projects if governments are pessimistic (relative to the private sector) about the probability an intervention would succeed or if the government is particularly averse to paying costs associated with a project that does not generate offsetting benefits. As various public programs include both these features, we conclude that SIBs are a real innovation in public finance and should be considered for projects when traditional debt finance has been rejected.

Keywords: Fixed Income Securities; impact Investing; Public Goods; Social Impact Bonds (search for similar items in EconPapers)
JEL-codes: G12 H41 P16 (search for similar items in EconPapers)
Date: 2022-04
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=17214 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: A Theory of Social Impact Bonds (2020) Downloads
Working Paper: A Theory of Social Impact Bonds (2020) Downloads
Working Paper: A Theory of Social Impact Bonds (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:17214

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=17214

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2022-10-29
Handle: RePEc:cpr:ceprdp:17214