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  • 2021
  • Working Paper
  • HBS Working Paper Series

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

By: Shawn Cole, Martin Melecky, Florian Mölders and Tristan Reed
  • Format:Print
  • | Language:English
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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.

Keywords

Impact Investing; Investment; Emerging Markets; Developing Countries and Economies; Investment Return

Citation

Cole, Shawn, Martin Melecky, Florian Mölders, and Tristan Reed. "Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies." NBER Working Paper Series, No. 27870, September 2020. (Revised June 2021. Harvard Business School Working Paper, No. 21-138, June 2021)
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About The Author

Shawn A. Cole

Finance
→More Publications

More from the Authors

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    What Do Impact Investors Do Differently?

    By: Shawn A. Cole, Leslie Jeng, Josh Lerner, Natalia Rigol and Benjamin N. Roth
    • May 2022
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    Can Gambling Increase Savings? Empirical Evidence on Prize-Linked Savings Accounts

    By: Shawn A. Cole, Benjamin Iverson and Peter Tufano
    • October 2021 (Revised July 2022)
    • Faculty Research

    Engine No. 1: An Impact Investing Firm Engages with ExxonMobil

    By: Mark Kramer, Shawn Cole, Vikram S. Gandhi and T. Robert Zochowski
More from the Authors
  • What Do Impact Investors Do Differently? By: Shawn A. Cole, Leslie Jeng, Josh Lerner, Natalia Rigol and Benjamin N. Roth
  • Can Gambling Increase Savings? Empirical Evidence on Prize-Linked Savings Accounts By: Shawn A. Cole, Benjamin Iverson and Peter Tufano
  • Engine No. 1: An Impact Investing Firm Engages with ExxonMobil By: Mark Kramer, Shawn Cole, Vikram S. Gandhi and T. Robert Zochowski
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