小瓢虫传媒

A Theory of Social Finance

Simon Corn茅e, Universit茅 de Rennes I

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 鈥渜uasi-foundations鈥� 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鈥� optimal strategy and suggest that "quasi -foundation" can be efficient vehicles for social finance, especially when social screening costs are relatively low.
(Joint paper with M. Jegers (VUB and A. Szafarz (ULB)