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

42 Pages Posted: 12 Jun 2019

See all articles by Julia Meyer

Julia Meyer

University of Zurich - Department of Banking and Finance; ZHAW School of Management and Law

Annette Krauss

University of Zurich - Department of Banking and Finance / CSP

Kremena Bachmann

ZHAW Zurich University of Applied Sciences

Date Written: April 15, 2019

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.

Keywords: impact investing, sustainable investing, investor motivations, behavioral finance, microfinance

JEL Classification: G10, G11, G21, G23

Suggested Citation

Meyer, Julia and Krauss, Annette and Bachmann, Kremena, Drivers of Investor Motivations for Impact Investments: The Case of Microfinance (April 15, 2019). Available at SSRN: https://ssrn.com/abstract=3395275 or http://dx.doi.org/10.2139/ssrn.3395275

Julia Meyer

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 30/32
Zürich, 8032
Switzerland

ZHAW School of Management and Law ( email )

St.-Georgen-Platz 2
Winterthur, 8401
Switzerland

Annette Krauss (Contact Author)

University of Zurich - Department of Banking and Finance / CSP ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

HOME PAGE: http://www.bf.uzh.ch

Kremena Bachmann

ZHAW Zurich University of Applied Sciences ( email )

ZHAW School of Management and Law
Technoparkstrasse 2
Winterthur, CH 8401
Switzerland

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