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Drivers of Investor Motivations for Impact Investments: The Case of Microfinance


Meyer, Julia; Krauss, Annette; Bachmann, Kremena (2019). Drivers of Investor Motivations for Impact Investments: The Case of Microfinance. SSRN 3395275, University of Zurich.

Abstract

Recent empirical research shows that both financial and value-related considerations prevail for an individual’s decision to invest in companies or products deemed sustainable or socially responsible. This paper investigates how different investor motivations vary across forms of sustainable investment strategies, in particular between broad sustainable investments and targeted impact investments. We use a unique dataset of retail investors engaged in a development oriented microfinance investment vehicle to analyze how different motives affect the demand for distinct sustainable investments. Our results show that different motives trigger different types of sustainable investments. While decisions to engage in general sustainable investments are mainly linked to return and risk expectations, the investment decision for the impact investment vehicle is connected more strongly to value attributes. In line with previous findings on general sustainable investments, we find that the decision to invest is driven more by value-related criteria while the amount invested is driven by financial motivations. Our analysis furthermore shows that distrust in the financial markets is a major driver for the share invested in general sustainable investments, but not in impact investments.

Abstract

Recent empirical research shows that both financial and value-related considerations prevail for an individual’s decision to invest in companies or products deemed sustainable or socially responsible. This paper investigates how different investor motivations vary across forms of sustainable investment strategies, in particular between broad sustainable investments and targeted impact investments. We use a unique dataset of retail investors engaged in a development oriented microfinance investment vehicle to analyze how different motives affect the demand for distinct sustainable investments. Our results show that different motives trigger different types of sustainable investments. While decisions to engage in general sustainable investments are mainly linked to return and risk expectations, the investment decision for the impact investment vehicle is connected more strongly to value attributes. In line with previous findings on general sustainable investments, we find that the decision to invest is driven more by value-related criteria while the amount invested is driven by financial motivations. Our analysis furthermore shows that distrust in the financial markets is a major driver for the share invested in general sustainable investments, but not in impact investments.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:12 June 2019
Deposited On:11 Feb 2020 14:24
Last Modified:11 Feb 2020 14:26
Series Name:SSRN
Number of Pages:27
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3395275
Other Identification Number:merlin-id:17964

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