Impact investing and ESG factors
The literature has recently focused on new models of social business where the primary goal of the investment is not anymore a positive return on the investment, but rather, the generation of a sustainable social impact. We refer to this type of model as Social Impact Investment (SI). A non-less important research strand is the one related to ESG (Environmental, Social, and Governance) indicators. This is an umbrella term for socially responsible investments that seek positive returns and long-term impact on society, environment, and the performance of the business. Often, these type of investors adopt shareholder activism to align strategies of investee firms with these objectives.
SME financing sources, microcredits, and social business
Small and Medium Enterprises (SMEs) play a major role in most economies, and the literature has largely studied the financing sources that characterize the firm life–financial cycle: “small business may be thought of as having a financial growth cycle in which financial needs and options change as the business grows, gains further experience, and becomes less informationally opaque. [This is modeled] in a stylized fashion in which firms lie on a size/age/information continuum.” (Berger and Udell, 1998 – p. 622).
Moreover, SMEs are particularly important in developing countries where the formal financial channels are weak. Overall, approximately 70% of all micro, small, and medium-sized enterprises (MSMEs) in emerging markets lack access to credit. Although the gap varies considerably from region to region, it is particularly wide in Africa and Asia. The current credit gap for formal SMEs is estimated to be US$1.2 trillion. The total credit gap for both formal and informal SMEs is as high as US$2.6 trillion, and microcredit has emerged as a solution to formal financial credit rationing. Impact finance, its relationship with environmental, social, and governance (ESG) factors, and social impact measurements represent relevant topics for new research.
Bank efficiency and M&A
Bank efficiency is a major issue in the traditional financial literature. The recent crisis reveals that factors other than operational costs, interest margins, and activity diversification play a role and, among them, governance and regulatory aspects appear to be of prominent importance. In this respect, the current bank M&A wave aims to improve cost efficiency. Recently, business model research has been a crucial issue in terms of stability and profitability. FinTech (Financial Technology) plays a key role in the reshaped financial system.
Bank corporate governance and stability
The global financial crisis has led to a reexamination of corporate governance practices at banks, given that some misleading boards’ behavior may increase risk-taking and generate financial instability. Thus, it is useful to understand how different board composition may reduce risk-taking. Some researchers are investigating whether board gender diversity increases the creation of value for stakeholders. Further developments may arise from comparing large banks’ board compositions to those of smaller ones with the goal of understanding their impact in terms of financial stability.
Saving and financial literacy
At international and national levels, policymakers pay attention to financial education as a means by which to prevent savers’ losses. The group has been working on this topic, cooperating with the Italian association of lecturers in banking and finance (ADEIMF).
Social business and impact finance
Based on the Grameen Bank microcredit experience, the literature has recently formulated social business models that require new value propositions, value constellations, and profit equations, and, therefore, resemble business model innovation. This new approach aims to evaluate the social impact in terms of stakeholders’ value maximization (as opposed to the traditional approach of evaluating shareholders’ value maximization).