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A Theory of Social Finance

Simon Cornée, Marc Jegers and Ariane Szafarz
Additional contact information
Simon Cornée: Univ Rennes, CREM, CNRS, UMR 6211, F-35000 Rennes, France, and CERMi
Marc Jegers: Vrije Universiteit Brussel (VUB), Department of Applied Economics, Belgium

Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS

Abstract: Myriad different types of institutions are involved in social finance. This paper attempts to make sense of the diverse ways of operationalizing the delivery of funds by social financial institutions (SFIs). It explores the continuum of feasible SFIs, which range from foundations offering pure grants to social banks supplying soft loans. The in-between category includes “quasi-foundations” granting loans that require partial repayment only. In our model, the SFIs face information asymmetries and trade off costly social screening against social contributions, under the budget constraint that depends on the generosity of their funders. We characterize the SFIs’ optimal strategy and suggest that quasi-foundations can be efficient vehicles for social finance, especially when social screening costs are relatively low.

Keywords: Social Finance; Philanthropy; Foundations; Social Banks (search for similar items in EconPapers)
JEL-codes: D63 G21 G24 H25 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-hpe, nep-mfd and nep-mic
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Citations: View citations in EconPapers (5) Track citations by RSS feed

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Working Paper: A Theory of Social Finance (2018) Downloads
Working Paper: A Theory of Social Finance (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:2018-02

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