ACRN Journal of Finance and Risk Perspectives
Vol. 4, Issue 3, July 2015, ISSN 2305-7394
Special Issue - Social and Sustainable Finance and Impact Investing
TABLE OF CONTENTS
EDITORIAL BOARD
A ROLE OF SOCIAL FINANCE BY A COOPERATIVE:
A CASE STUDY OF GREEN COOP FUKUOKA, JAPAN
Sachiko Nakagawa1
1 Keio University, Japan
Abstract: Social finance has filled the important role for financially excluded
people in Japan. Especially, Green Coop Fukuoka is remarkable because Green
Coop Fukuoka not only loans money to financially excluded people but also
implements regular face-to-face counseling on family budget management to them
for an indefinite period after lending. In addition, Green Coop Fukuoka
finances both members and non-members by utilizing investments from members.
The central purpose of this chapter is to show what enables members to cooperate
with Green Coop Fukuoka to help financially excluded people regardless of
whether they are a member or not, and what extent Green Coop Fukuoka can
connect those people with comfortable life. As a result of interviews with Green
Coop Fukuoka and the partner of Fukuoka Prefectural Government, I found that
in-depth discussion about causes of financial exclusion and importance of mutual
help and solidarity for solution among members drew their understanding and
cooperation to tackle financial exclusion. Furthermore, most of 9,000 clients
could solve their financial problems and regain comfortable life. In the
conclusion, I stressed importance of the initiative by Green Coop Fukuoka and
Fukuoka Prefectural Government for the development of social finance in Japan
and the realization of inclusive society.
Keywords: Social Finance, Cooperatives, Green Economy, Japan
LEVERAGING DEVELOPMENT WITH TECHNOLOGY AND MICROFINANCE
Roberto Moro Visconti 1
1 Department of Business Administration, Università Cattolica del Sacro Cuore, Milan, Italy
Abstract: The poor are typically isolated, lacking opportunities and being
deprived of necessary developmental assets such as proper communication and
networking. Network theories may thus act as an original starting point for
interpreting issues of poverty, which can be alleviated by combining basic
technology with affordable funding programs such as microcredit. Value-adding
technology, levered by microfinance, may then be sequentially added to the
development paradigm. To the extent that technology and microfinance can be
suitably combined, they may lever scalable productivity, in a way similar to
Metcalfe’s exponential upsides for networking organizations. This may happen for
instance with M-banking, within a ‘digital culture’ environment, and with viral
social networks, such as Facebook or Twitter, or Mobile Apps.
Keywords: Poverty traps, Microfinance, Mobile banking, Metcalfe’s networking, Mobile Apps.
A HOLISTIC APPROACH TO FINANCIAL LITERACY EDUCATION
Mark Brimble and Levon Blue1
1 Griffith Business School, Griffith University, Australia
Abstract: Financial literacy education (FLE) continues to gain momentum
globally with a view to combating the reported financial illiteracy experienced
around the globe with the aim of delivering significant economic and social
benefits as well. With this in mind, when educating individuals about personal
finances through FLE, an understanding that not everyone has a focus on wealth
accumulation is required to educate in ways that are socially just, responsible
and sustainable. We argue that moving towards a more holistic and sustainable
approach to FLE is timely and put forward an alternative approach to the often
narrow and information provision approach that focus on ‘technical’ issues such
as budgeting. FLE is so much more than learning how to budget and it is time to
move on from this over prescribed approach.
Keywords: Financial Education, Financial Literacy, Critical Theory
DISAMBIGUATING THE CONCEPT OF SOCIAL BANKING
Francesc Relano1
1 ICN Business School, Nancy, France
Abstract: The concept of social banking is often confused with other similar
notions, such as alternative, civic, value-driven, ethical or sustainable banks. This
ambiguous situation makes it very easy for a given financial institution to
proclaim their social and environmental commitment. Quite often, however, there
is an obvious gap between overstated intentions and real facts. Within this
context, the aim of this paper is to draw a clear distinction between the concept of
social banking and other related banking practices.
In more precise terms, the paper will first explore the context allowing the
emergence of social banking. Secondly, a concrete characterization of social
banks will be proposed taking into account two complementary approaches: 1) a
study of their specific underlying philosophy; 2) an analysis of their distinct
banking practice.
Keywords: Concept, Social Banking, Ethical Banking, Paradigm
MONETARY AND FISCAL (SPENDING) COMPLEMENTARITIES TO ATTAIN SOCIOECONOMIC
SUSTAINABILITY
Masudul Alam Choudhury1
1 Social Economy Centre, Ontario Institute for Studies in Education, University of Toronto, Canada.
Abstract: The paper is a study of pervasively complementary relations between
money, spending, and real economy with technological change. The endogenous
interrelations between these variables sustain price stability and economic
growth. The usual full-employment implications of inflation and neutrality of
monetary and fiscal effects on the real output in the money, spending, and real
economy model that is formalized are shown to change several of the
consequences of the Keynesian and monetarist model of general macroeconomic
equilibrium. Instead, a Schumpeterian growth model, and financial implications
of Romer’s endogenous growth model stand out to be more appropriate. The
conceptual model of the money, spending, and real economy endogenous
relationship with technological change is rendered to empirical testing by the
circular causation model, as in the case of Myrdal’s cumulative causation, but
with financial implications. Malaysian data are used in the estimation of the
system of circular causation equations.
Keywords: Fiscal Policy, Spending, Socioeconomic Sustainability
MICROFINANCE AND INVESTMENT IN HUMAN AND
SOCIAL CAPITAL
P.V. Viswanath1
1 Lubin School of Business, Pace University, USA
Abstract: Although microfinance has traditionally meant micro-credit, not all
microfinance institutions (MFIs) restrict themselves to microcredit. One can make a
distinction between minimalist MFIs that only provide microcredit, a second group
that provides other kinds of financial services as well, a third group that provides
capacity building and finally, a fourth group that provides social services and other
development services. In this paper, we ask the question as to when a more expansive
approach to microfinance might be justified and suggest that a market failure theory
of financial exclusion can be used to answer this question. We then examine one
particular south Indian MFI, Evangelical Social Action Forum (ESAF) and argue
that while an associated focus on capacity development can be justified, ESAF’s
expansion to the provision of broader social services such as health and social
advocacy may not be more difficult to justify on purely economic grounds. We
suggest that the analysis of ESAF could be used as a model, both to understand the
choice of MFI missions, as well as to prescribe the right mission and goal for MFIs
in different environments.
Keywords: MFI, Microfinance, Investments, Mission Driven, Impact
CALCULATION OF SOCIAL RETURN ON INVESTMENT
(SROI) RATIO OF A LOCAL ECOLOGICAL INITIATIVE Svetlana
Boguslavskaya1 and Nadezhda Rozhdestvenskaya2
1 St.Petersburg School of Economics and Management, National Research University Higher School of Economics, Russia
2 Hertzen State Pedagogical University of Russia
Abstract: To create a reporting system that illustrates the social results of an
ecological initiative and that this represents a substantial challenge, especially
when it has an extremely small budget and is new. The study shows that it is,
nevertheless, possible to develop such a system using Social Return on Investment
(SROI) methodology. The Russian ecological movement “Razdelniy sbor”
(“Separate collection”) from the city of St. Petersburg has been used for the
evaluative (retrospective) SROI case study.
The study contains a quick overview of SROI methodology with links to relevant
articles and guidelines. It touches on aspects of identifying stakeholders and
building a theory of change. A system of indicators has been developed for the
purpose of estimating social impact, while financial proxies for outcomes have
been corrected for attribution and deadweight.
The study may therefore be of interest from both the theoretical and practical
standpoint. It can be used as an example for estimating the social value of a
similar initiative, and additionally, addresses several important issues concerning
SROI methodology.
It argues for using the prudence concept in evaluating resources and outcomes,
calls for detailed analysis of negative outcomes, emphasizes the importance of
choosing appropriate discounting methods. Taking these steps prevents SROI
ratio from being overestimated and ensures the transparency of SROI reports. The
study also shows possible reasons for low SROI ratios (below 1) and proposes
ways to increase social efficiency.
Keywords: SROI, Accounting, Indicator, Ecological Movement, Social Return on Investment
FISCAL SUSTAINABILITY AND THE WELFARE STATE IN
EUROPE
Zsófia Barta1
1University at Albany, SUNY, USA
Abstract: The issue of fiscal sustainability has gained increasing attention in the
past decades as many prosperous developed countries grapple with growing
levels of explicit debt and implicit liabilities. However, there is a considerable gap
between the theoretical concept of fiscal sustainability and the metrics that policyanalysts use in practice to gauge looming fiscal problems. The discrepancy has
considerable impact on the policy recommendations that follow from different
assessments of fiscal sustainability. This chapter contrasts the theoretical
literature on fiscal sustainability with the practical applications of the concept by
organizations like the IMF, the OECD and the European Commission to explore
the implications of different assessments for policy. It shows that tests of fiscal
sustainability applied by these three entities rest on partial equilibrium models
that support a very conservative interpretation of fiscal sustainability, which is
not inherent in the theoretical concept. Recommendations for austerity logically
follow from this particular interpretation. The chapter also presents an
alternative conception of sustainability, which seeks to combine fiscal, economic
and social sustainability through appropriate social spending. It notes that the
IMF, the OECD and the European Commission had embraced this alternative
notion before, but it seems to be completely abandoned in the wake of the Global
Financial and Economic Crisis.
Keywords: Fiscal Sustainability, Welfare State, Crisis, Policy