Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
2.28 The degree of financial sector development within a country can potentially have an influence on
the development of the social impact investment. Figure 2.5 below shows the difference in financial sector
development in the G7 countries and Australia according to a 2012 World Economic Forum report. It can
be noted that the most active social impact investment markets are currently in the two countries with the
most developed financial sectors.
Figure 2.5. Financial Sector Development
Scores 1 to 7, as of 2012
Banking financial services Non-banking financial services Financial markets
7
6
5
4
3
2
1
0
USA UK Japan Australia Canada Germany France Italy
Source: OECD based on WEF (2012).
2.29 The development of capital markets often leads to availability of a range of products across the
risk return spectrum. Different types of financing instruments may be more appropriate for different stages
of the development of a venture (Wilson and Silva, 2013). Figure 2.6 illustrates a typical life-cycle of a
firm along with the various stages of financing and types of financing instruments. The figure below
highlights the complexity of financing and the need for a mix of instruments to address the various growth
phases of a firm.
Figure 2.6. Life-cycle of a firm and stages of financing
Source: OECD (2013a) based on Natusch (2003).
© OECD 2015 19