Social impact investing and its determining success factors: insights from a social impact investor perspective

Abstract

Creating social impact as a financial market has received some interest over the last few years. Yet, little academic research has been conducted to justify the excitement. This study aims to build on the current literature on social impact investment and explores the determining factors of success for investments. Instead of using the social enterprise point of view, as other studies before, it gives insights from the investor’s perspective. As investors forwardly are concerned about risk and return, the social impact creation and its influence on investment success is neglected in the study. For the empirical investigation, the paper uses a dataset of over 400 investment transactions made over the course of 2005 until 2013. In line with the hypothesis that a longer maturity could potentially hurt the investment success, the outcomes show that giving out investments for a longer period of time increases the return of investment while simultaneously increasing the change of capital write off.