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    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies
      13 Nov 2020Working Paper Summaries

      Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies

      by Shawn Cole, Martin Melecky, Florian Mölders, and Tristan Reed
      Examination of every equity investment made by the International Finance Corporation, one of the largest and longest-operating impact investors, shows this portfolio has outperformed the S&P 500 by 15 percent.
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      Author Abstract

      There is growing interest in impact investing, the idea of deploying capital to obtain both financial and social or environmental returns. Examination of every equity investment made by the International Finance Corporation, one of the largest and longest-operating impact investors, across 130 emerging market and developing economies shows that this portfolio has outperformed the S&P 500 by 15 percent. Investments in larger economies have higher returns, and returns decline as banking systems deepen and countries relax capital controls. These results are consistent with imperfect integration of international capital markets, and a core thesis of impact investing that some eligible markets do not receive sufficient investment capital.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: September 2020
      • HBS Working Paper Number: NBER Working Paper Series, No. 27870
      • Faculty Unit(s): Finance
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      Shawn A. Cole
      Shawn A. Cole
      John G. McLean Professor of Business Administration
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